PLUTONIUM 

DISPOSITION 

PROGRAM

DOE Needs to 

Analyze the Root 

Causes of Cost 

Increases and 

Develop Better Cost 

Estimates

Report to the Subcommittee on Energy 

and Water Development, and Related 

Agencies, Committee on 

Appropriations, House of 

Representatives

February 2014

GAO-14-231

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-231, a report to the 

Subcommittee on Energy and Water 

Development, and Related Agencies, 

Committee on Appropriations, House of 

Representatives

February 2014

PLUTONIUM DISPOSITION PROGRAM

DOE Needs to Analyze the Root Causes of Cost 

Increases and Develop Better Cost Estimates

Why GAO Did This Study

NNSA, a separately organized agency 

within DOE, manages the Plutonium 

Disposition program to dispose of 

surplus weapons-grade plutonium by 

burning it as MOX fuel—a mixture of

plutonium and uranium oxides—in 

specially modified commercial nuclear 

reactors. In 2012, DOE forecasted cost 

increases of close to $3 billion over the 

previous estimates for the program’s 

two construction projects, the MOX 

facility and the WSB for disposing of 

waste from the MOX facility.

GAO was asked to review these cost 

increases and the life-cycle cost

estimate. This report examines: (1) 

drivers NNSA identified for the cost 

increases; (2) the extent to which 

NNSA analyzed underlying causes of 

the cost increases; (3) steps NNSA 

took to hold construction contractors 

accountable for their role, if any, in the 

cost increases; and (4) the extent to 

which NNSA’s most recent estimates 

met cost- and schedule-estimating best 

practices. GAO reviewed NNSA’s draft 

life-cycle cost estimate and contractor 

estimates of the MOX project’s cost 

and WSB schedule, compared the 

estimates with cost- and scheduleestimating best practices, and 

interviewed DOE and NNSA officials.

What GAO Recommends

GAO is recommending, among other 

things, that DOE conduct a root cause 

analysis of the Plutonium Disposition 

program’s cost increases and ensure 

that future estimates of the program’s 

life-cycle cost and cost and schedule 

for the program’s construction projects

meet all best practices for reliable 

estimates. DOE generally agreed with 

GAO’s recommendations.

What GAO Found

The Department of Energy’s (DOE) National Nuclear Security Administration

(NNSA) identified various drivers for the close to $3 billion increase in the 

estimated cost of the Plutonium Disposition program’s two construction 

projects—the Mixed Oxide (MOX) Fuel Fabrication Facility and the Waste 

Solidification Building (WSB). These drivers included DOE’s approval of the MOX 

facility’s cost and schedule estimates before design was complete and schedule 

delays in construction of the WSB. According to NNSA, the cost of critical system 

components for the MOX facility averaged 60 percent higher than estimated as a 

result of approval of estimates before design was complete.

NNSA has not analyzed the underlying, or root, causes of the Plutonium 

Disposition program construction cost increases to help identify lessons learned

and help address the agency’s difficulty in completing projects within cost and 

schedule, which has led to NNSA’s management of major projects remaining on 

GAO’s list of areas at high risk of fraud, waste, abuse, and mismanagement. 

DOE’s project management order requires that lessons learned be captured 

throughout a project to, among other things, benefit future endeavors. NNSA 

officials said that, because the order does not require a root cause analysis of 

cost increases, NNSA decides on a case-by-case basis whether to conduct one.

Unlike a root cause analysis, the cost drivers NNSA identified provided few 

details about why the drivers existed, such as DOE’s reasons for approving the 

MOX facility’s cost and schedule estimates before the design was complete.

Without a root cause analysis, it is uncertain whether NNSA will be able to 

accurately identify underlying causes of the increases to identify and implement 

corrective measures and identify lessons learned to apply to other projects.

After determining that the performance of the contractors for the MOX facility and 

WSB contributed to cost increases, NNSA took steps to hold the contractors 

accountable by withholding fees specified under the contracts. In particular, as of 

November 2013, NNSA withheld $45.1 million or close to one-third of the MOX 

contractor’s fees, including fees tied to meeting the MOX project’s cost and 

schedule estimates. In addition, NNSA withheld $7.7 million or about 40 percent 

of the WSB contractor’s fees tied to various performance measures for the WSB, 

such as completing construction milestones.

NNSA’s most recent estimates for the Plutonium Disposition program did not fully 

reflect all the characteristics of reliable cost estimates (e.g., credible) and 

schedule estimates (e.g., well-constructed) as established by best practices for 

cost- and schedule-estimating, placing the program at risk of further cost 

increases. For example: (1) NNSA’s draft April 2013 life-cycle cost estimate of 

$24.2 billion for the overall program was not credible because NNSA did not

conduct an independent cost estimate to provide an unbiased test of whether the

estimate was reasonable. (2) Because the MOX contractor’s September 2012 

proposal for increasing the cost of the MOX facility did not include a formal 

analysis to examine the effects of changing assumptions, it was minimally 

credible. (3) The WSB contractor’s February 2013 monthly update to its schedule 

estimate was minimally well-constructed in that it contained activities that were 

not properly tied with the start or end date of other activities, which could 

potentially obscure the critical path determining the project’s completion date.

View GAO-14-231. For more information, 

contact David C. Trimble at (202) 512-3841 or 

trimbled@gao.gov.
Page i GAO-14-231 Plutonium Disposition Program

Letter 1

Background 5

NNSA Identified Various Cost Drivers for the Plutonium 

Disposition Program’s Construction Projects 11

NNSA Has Not Analyzed Root Causes of the Cost Increases for 

the Plutonium Disposition Program’s Construction Projects 16

NNSA Has Taken Steps to Hold Contractors Accountable for Cost 

Increases by Withholding Fees 18

Estimates for the Plutonium Disposition Program’s Life-cycle Cost 

and Construction Projects Did Not Meet All Best Practices for 

Reliability 23

Conclusions 32

Recommendations for Executive Action 33

Agency Comments and Our Evaluation 34

Appendix I Objectives, Scope, and Methodology 38

Appendix II Assessment of NNSA’s Process for Developing a Life-cycle Cost 

Estimate for the Plutonium Disposition Program 42

Appendix III Assessment of the MOX Contractor’s Proposed Cost Estimate 

Compared with Industry Best Practices 44

Appendix IV Assessment of the Waste Solidification Building’s Schedule Estimate 

Compared with Industry Best Practices 46

Appendix V Comments from the National Nuclear Security Administration 47

Appendix VI GAO Contact and Staff Acknowledgments 51

Contents
Page ii GAO-14-231 Plutonium Disposition Program

Tables

Table 1: Types of Fees for Construction of the MOX Facility and 

Amounts Paid, Withheld, and Remaining to Be Earned as 

of November 2013 19

Table 2: Fees Paid and Withheld for Construction of the WSB 

through Fiscal Year 2012 22

Table 3: NNSA’s Draft Life-cycle Cost Estimate for the U.S. 

Plutonium Disposition Program, as of April 2013 24

Table 4: Four Characteristics of a High-Quality Cost Estimate with 

Their Corresponding 12 Key Cost Estimating Steps (or 

Best Practices) 25

Table 5: MOX Contractor’s September 2012 Proposal for 

Increasing the Project’s Cost 30

Table 6: Four Characteristics of a High-Quality Schedule Estimate 

with Their Corresponding Best Practices 30

Figures

Figure 1: Aerial Views of the Plutonium Disposition Program’s 

Construction Projects 6

Figure 2: DOE and NNSA Organizational Structure for 

Management of the Plutonium Disposition Program 10

Abbreviations

DOE Department of Energy

EVM earned value management

FAR Federal Acquisition Regulation

MIFT MOX Irradiation, Feedstock, and Transportation

MOX mixed oxide

NNSA National Nuclear Security Administration

NRC Nuclear Regulatory Commission

PDCF Pit Disassembly and Conversion Facility

PDIP Plutonium Disposition and Infrastructure Program

WSB Waste Solidification Building

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Page 1 GAO-14-231 Plutonium Disposition Program

441 G St. N.W.

Washington, DC 20548

February 13, 2014

The Honorable Mike Simpson

Chairman

The Honorable Marcy Kaptur

Ranking Member

Subcommittee on Energy and Water Development, and Related Agencies

Committee on Appropriations

House of Representatives

Plutonium is a man-made, radioactive element that poses a danger of 

nuclear weapons proliferation and a risk to human health and the 

environment. Under an agreement signed in 2000, the United States and 

Russia have each pledged to dispose of at least 34 metric tons of surplus 

weapons-grade plutonium no longer needed for defense purposes by 

burning it as mixed oxide (MOX) fuel in specially modified commercial 

nuclear reactors.1 Once used and removed from a reactor, the plutonium 

can no longer be readily used to make a nuclear weapon. The National 

Nuclear Security Administration (NNSA), a separately organized agency 

within the Department of Energy (DOE), manages the Plutonium 

Disposition program. As part of this program, NNSA entered into separate 

contracts for design and construction services for two facilities at DOE’s 

Savannah River Site in South Carolina: (1) the MOX Fuel Fabrication 

Facility for producing MOX fuel for nuclear reactors and (2) the Waste 

Solidification Building (WSB) for disposing of liquid waste from the MOX 

facility.2

Under DOE’s project management order3

 1

MOX fuel is a mix of plutonium and uranium oxides.

and related policies and 

guidance, NNSA project directors are responsible for managing the MOX 

facility and WSB construction projects and overseeing the contractors that 

design and construct the facilities. Among other things, the project 

2

The contractor for the MOX facility is Shaw AREVA MOX Services, LLC. The contractor 

for the WSB is Savannah River Nuclear Solutions, LLC. Design and construction 

management of the WSB is included in the contract between Savannah River Nuclear 

Solutions and DOE for management and operation of the Savannah River Site.

3

DOE, Program and Project Management for the Acquisition of Capital Assets, DOE 

Order 413.3B (Washington, D.C.: Nov. 29, 2010).
Page 2 GAO-14-231 Plutonium Disposition Program

management order establishes a process for DOE and NNSA to review 

and approve a project’s construction cost and schedule estimates, 

including changes to the estimates; report monthly on a project’s cost and 

schedule performance; and conduct project reviews at least once per 

year.

In February of 2013, NNSA’s contract administration and project 

management were again included on GAO’s list of areas at high risk of 

fraud, waste, abuse, and mismanagement.4 In particular, NNSA has 

experienced long-standing difficulties in completing major projects within 

cost and on schedule. As we testified in March 2013, DOE forecasted an 

increase in its estimated cost and schedule to complete the MOX facility 

and WSB.5

• MOX facility. In April 2007, DOE approved a cost estimate for the 

MOX facility of $4.8 billion and start of operations in September 

2016.

Specifically, in 2012, DOE forecasted a close to $3 billion 

increase in the estimated cost to complete the two facilities:

6

• WSB. In December 2008, NNSA approved start of construction of the 

WSB and a cost estimate of $344.5 million and start of operations in 

September 2013.

Construction began in August 2007. In 2012, at NNSA’s 

direction to update the estimate, the MOX contractor submitted a 

proposal to increase the cost of the facility to $7.7 billion with the start 

of operations delayed to November 2019. DOE began evaluating the 

proposal and, pending the outcome of its evaluation, directed the 

contractor to use its proposed cost and schedule estimate as a 

provisional baseline for purposes of monthly reporting.

7

 4

GAO, High-Risk Series: An Update, 

In February 2012, NNSA directed the WSB 

contractor to develop a plan to address potential cost and schedule 

GAO-13-283 (Washington, D.C.: February 2013). In 

our 2013 High-Risk Update, we narrowed the focus of NNSA’s high-risk designation to 

major contracts and projects, those with values of at least $750 million, to acknowledge 

progress made in managing smaller value efforts.

5

GAO, Department of Energy: Concerns with Major Construction Projects at the Office of 

Environmental Management and NNSA, GAO-13-484T (Washington, D.C.: Mar. 20, 

2013).

6

In December 2008, as a result of funding reductions for fiscal year 2008, DOE approved 

a revised cost estimate for the MOX facility of $4.9 billion and a 1-month delay in the start 

of operations to October 2016.

7

As described in NNSA’s acquisition strategy, the WSB’s start of operations included a 

buffer to allow for delays without having an impact on start-up testing of the MOX facility.
Page 3 GAO-14-231 Plutonium Disposition Program

overruns. In December 2012, NNSA approved an increase in the 

estimated cost to $414.1 million and a delay in the start of operations 

to August 2015.

NNSA has not finalized a life-cycle cost estimate for the Plutonium 

Disposition program—that is, an estimate of all costs to complete the 

mission to dispose of surplus weapons-grade plutonium—but, in April 

2013, it completed a draft estimate of $24.2 billion. In addition to 

construction costs, the estimate included operation and maintenance of 

the MOX facility and WSB, as well as other components of the program, 

such as production of plutonium feedstock for the MOX facility. The lifecycle cost estimate also included $5.2 billion in actual costs through fiscal 

year 2012: $3.4 billion for the MOX facility, $265 million for the WSB, and 

$1.5 billion for other components of the program.

In 2013, in light of the cost increases for the Plutonium Disposition 

program’s construction projects, the fiscal year 2014 budget request for 

NNSA stated that converting plutonium to MOX fuel may be unaffordable. 

The budget request announced that, as a result, NNSA would slow down 

activities associated with the current plutonium disposition strategy during 

an assessment of alternative plutonium disposition strategies. As of 

January 2014, this assessment had not yet been completed.

To provide assistance to federal agencies in preparing cost and schedule 

estimates, we have compiled best practices used throughout government 

and industry. In March 2009 and May 2012, we issued guides identifying 

the characteristics of high-quality, reliable cost and schedule estimates, 

respectively.8

You asked us to review issues related to the construction cost increases 

for the MOX facility and WSB and the life-cycle cost of the overall 

Plutonium Disposition program. This report examines: (1) drivers of the 

cost increases that NNSA identified for the Plutonium Disposition 

program’s construction projects, (2) the extent to which NNSA analyzed 

Specifically, the four characteristics of a high-quality cost 

estimate are comprehensive, well-documented, accurate, and credible, 

and the four characteristics of a high-quality schedule estimate are 

comprehensive, well-constructed, credible, and controlled.

 8

GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009); and 

GAO, GAO Schedule Assessment Guide: Best Practices for Project Schedules, 

GAO-12-120G (Washington, D.C.: May 2012).
Page 4 GAO-14-231 Plutonium Disposition Program

underlying causes of the cost increases, (3) steps NNSA took under the 

contracts for the construction projects to hold the contractors accountable 

for their role, if any, in the cost increases, and (4) the extent to which 

NNSA’s most recent estimates for the program’s life-cycle cost and the 

cost and schedule for completing the program’s construction projects met 

best practices for reliable cost and schedule estimates.

To assess drivers of the cost increases, we reviewed the MOX 

contractor’s September 2012 proposal for increasing the project’s cost, 

the change to the WSB project’s cost approved in December 2012, and 

other documents. In addition, we visited the Savannah River Site to 

observe construction progress for both projects and interviewed NNSA

and contractor officials. Because the MOX facility represents most of the 

program’s construction cost increase, we also analyzed the MOX 

contractor’s system for tracking and reporting on cost and schedule 

performance. To determine the extent to which NNSA analyzed 

underlying causes of the cost increases, we reviewed DOE and NNSA 

documentation of the cost increases and interviewed NNSA officials. To 

determine steps taken to hold contractors accountable for their role in the 

cost increases, we reviewed the contracts for both projects, fees specified 

under the contracts, and NNSA’s fee evaluations and other 

documentation supporting its fee determinations. In addition, we obtained 

NNSA data on fees it paid to and withheld from the MOX and WSB 

contractors. We assessed the reliability of the data by interviewing NNSA 

contracting officers responsible for administering the contracts and other 

means, and we determined that the data were sufficiently reliable for 

reporting on the fees NNSA paid and withheld.

To assess the extent to which NNSA’s most recent estimates of the 

program’s life-cycle cost and the cost and schedule for completing the 

program’s construction projects met best practices, we tailored our 

methodology to the differing stages of NNSA’s development and approval 

of each estimate. Specifically, because NNSA had not finalized a lifecycle cost estimate for the program or a revised cost and schedule 

estimate for the MOX facility, we assessed the most recent available 

estimates—spreadsheets dated April 2013 representing NNSA’s draft lifecycle cost estimate and the MOX contractor’s September 2012 proposal 

for increasing the project’s cost. We assessed the WSB schedule 

estimate because, as described in the GAO Schedule Assessment Guide, 

a reliable schedule can contribute to an understanding of the cost impact 

if a project does not finish on time. Specifically, we compared the 

contractor’s February 2013 monthly update to its schedule estimate, 

which was the most recent available update when we conducted our 
Page 5 GAO-14-231 Plutonium Disposition Program

analysis. Additional details on our objectives, scope, and methodology 

can be found in appendix I.

We conducted this performance audit from November 2012 to February 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

The end of the cold war left the United States with a surplus of weaponsgrade plutonium. Much of this material is found in a key nuclear weapon 

component known as a pit. In 1997, DOE announced a plan to dispose of 

surplus, weapons-grade plutonium through an approach that included 

fabrication of plutonium into MOX fuel for use in domestic commercial 

nuclear reactors. In 2000, the United States and Russia entered into a 

Plutonium Management and Disposition Agreement, in which each 

country pledged to dispose of at least 34 metric tons of surplus, weaponsgrade plutonium. Through a protocol to the agreement signed in 2010, the 

United States and Russia reaffirmed their commitment to dispose of 

surplus, weapons-grade plutonium as MOX fuel in nuclear reactors, and 

the agreement entered into force in 2011.

The MOX facility is designed to remove impurities from plutonium 

feedstock obtained from nuclear weapon pits, form the plutonium into 

MOX fuel pellets, and fabricate pellets into fuel assemblies for use in a 

reactor. The MOX facility is a reinforced concrete structure measuring 

about 600,000 square feet (including support buildings) and, when 

complete, will include about 300 separate process systems using 

approximately 23,000 instruments; 85 miles of process piping; 500,000 

linear feet of conduit; 3,600,000 linear feet of power and control cable; 

and 1,000 tons of heating, ventilation, and air conditioning duct work. The 

WSB will be a 33,000 square foot reinforced concrete structure and will 

include tanks, evaporators, and solidification equipment to process 

radioactive liquid waste streams from the MOX facility into solid waste 

forms suitable for disposal at DOE sites in New Mexico and Nevada. 

Figure 1 shows aerial views of construction progress for the MOX facility 

and WSB as of June 2013 and July 2013, respectively.

Background
Page 6 GAO-14-231 Plutonium Disposition Program

Figure 1: Aerial Views of the Plutonium Disposition Program’s Construction Projects

In addition to the MOX facility and WSB, NNSA’s plans for the U.S. 

Plutonium Disposition program include the following two additional 

components:

• MOX Irradiation, Feedstock, and Transportation (MIFT). Among other 

activities, this component includes: (1) production of plutonium 

feedstock for the MOX facility, (2) qualification of MOX fuel for use in 

commercial nuclear reactors, and (3) procurement and maintenance 

of shipping containers for plutonium feedstock and MOX fuel.

• Plutonium Disposition and Infrastructure Program (PDIP). This 

component includes overall management and integration of the MOX 

facility and WSB projects and integration of the projects with activities 

falling under MIFT; preparation of environmental impact statements 

and records of decision for the program in accordance with the 

National Environmental Policy Act; support for infrastructure at the 

Savannah River Site, such as site roads; and other activities.

NNSA’s plans for producing plutonium feedstock previously included 

design and construction of a stand-alone Pit Disassembly and Conversion

Facility (PDCF) at the Savannah River Site. As we reported in March 

2010, NNSA never established a definitive cost and schedule estimate for 
Page 7 GAO-14-231 Plutonium Disposition Program

the PDCF,9 but NNSA estimated in January 2011 that the cost of the 

facility could range from $4.5 billion to $4.8 billion. NNSA canceled the 

PDCF in January 2012 and, instead, proposed in a July 2012 draft 

environmental impact statement to meet the feedstock requirements for 

the MOX facility through existing facilities at DOE’s Los Alamos National 

Laboratory and the Savannah River Site.10

In July 2012, NNSA also announced its preferred alternative for 

disposition of 13.1 metric tons of surplus plutonium not already included 

in the 34 metric tons planned for disposal as MOX fuel. The additional 

plutonium included pits declared excess to national defense needs, as 

well as surplus non-pit plutonium. According to NNSA officials, the 

preferred alternative would increase the amount of plutonium disposed as 

MOX fuel to about 42 metric tons. As of December 2013, DOE had not 

issued a final supplemental environmental impact statement or record of 

decision on the facilities to be used to meet plutonium feedstock 

requirements for the MOX facility or on the disposition pathway for the 

13.1 metric tons of surplus plutonium.

According to NNSA’s draft lifecycle cost estimate for the Plutonium Disposition program, NNSA spent 

$730.1 million on the PDCF prior to its cancellation.

NNSA’s Office of Defense Nuclear Nonproliferation provides policy 

direction for the Plutonium Disposition program, develops and manages 

annual budgets and the life-cycle cost estimate for the overall program, 

and manages the MIFT and PDIP components of the program.

NNSA’s Office of Acquisition and Project Management is responsible for 

managing construction of the MOX facility and WSB projects within 

approved cost and schedule estimates. To do so, the office manages 

teams of federal project directors and federal staff that provide direction 

and oversight of the contractors for both projects, report monthly on the 

projects’ cost and schedule performance, and evaluate contractors’

performance in areas such as management of subcontractors. The office 

also conducts reviews of the construction projects to evaluate technical, 

 9

GAO, Nuclear Nonproliferation: DOE Needs to Address Uncertainties with and 

Strengthen Independent Safety Oversight of Its Plutonium Disposition Program, 

GAO-10-378 (Washington, D.C.: Mar. 26, 2010).

10DOE, Draft Surplus Plutonium Disposition Supplemental Environmental Impact 

Statement, DOE/EIS-0283-S2 (Washington, D.C.: July 2012).
Page 8 GAO-14-231 Plutonium Disposition Program

cost, scope, and other aspects of the projects so that any necessary 

course corrections can be made. DOE’s project management order 

requires that such reviews be conducted at least once per year.

NNSA entered into cost-reimbursable contracts for construction of the 

MOX facility and WSB. A cost-reimbursable contract provides for 

payment of a contractor’s allowable incurred costs to the extent 

prescribed in the contract.11

The contractors for the MOX facility and WSB work with subcontractors to 

construct the facilities. For example, the WSB contractor entered into a 

subcontract that included all construction activities for the WSB with the 

exception of early site work, such as installation of underground utilities. 

Agencies may use cost-reimbursable 

contracts when uncertainties in the scope of work or cost of services 

prevent the use of contract types in which prices are fixed, known as 

fixed-price contracts. The MOX and WSB contracts included fees with 

payment tied to meeting or exceeding preestablished requirements or 

withholding of fees for any requirements not met, thereby reducing 

contractors’ profits. Under the MOX contract, NNSA provided four types 

of fees that the contractor could earn: (1) incentive fees—a type of fee 

specifically tied to meeting a project’s cost and schedule estimate; 

(2) milestone fees tied to on-time completion of construction milestones; 

(3) award fees, which are generally intended to motivate performance in 

areas other than cost and schedule, such as safety; and (4) fixed fees, a 

set amount a contractor receives for contract performance. In contrast, 

NNSA included only one type of fee for the WSB—a performance 

incentive fee under the contract for management and operation of the 

Savannah River Site, which included construction of the WSB. In order to 

provide the contractor performance incentives specifically related to 

construction of the WSB, NNSA established various performance 

measures, such as meeting the project’s cost and schedule and 

completing construction milestones, and allocated portions of the fee to 

each performance measure.

 11A cost is allowable if, among other things, it is reasonable, allocable to the contract at 

issue, and meets certain accounting standards and the terms of the contract. Federal 

Acquisition Regulation (FAR), 48 C.F.R. § 31.201-2 (2013). In general, a cost is allocable 

to a given contract if it is incurred specifically for the contract; benefits both the contract 

and other work, and can be distributed to them in reasonable proportion to the benefits 

received; or is necessary to the overall operation of the business, although a direct 

relationship to any particular cost objective cannot be shown. FAR, 48 C.F.R. § 31.201-4 

(2013).
Page 9 GAO-14-231 Plutonium Disposition Program

Once the construction subcontractor completes its work, the WSB 

contractor is responsible for start-up testing and operation of the facility.

Under DOE’s project management order, the Deputy Secretary of Energy 

is the senior DOE official accountable for all of the department’s project 

acquisitions. In addition, the Deputy Secretary approves cost and 

schedule estimates for all major construction projects—defined as those 

with values of at least $750 million, which includes the MOX facility—and 

approves any cost increase over $100 million for a major or nonmajor 

project. The DOE Office of Acquisition and Project Management conducts 

external independent reviews to validate estimates prior to approval by 

the Deputy Secretary. Once estimates have been approved, this office 

monitors projects’ cost and schedule performance and reports to the 

Deputy Secretary on a monthly basis. Figure 2 depicts the roles of NNSA, 

DOE, and contractors in managing the Plutonium Disposition program.
Page 10 GAO-14-231 Plutonium Disposition Program

Figure 2: DOE and NNSA Organizational Structure for Management of the 

Plutonium Disposition Program

The GAO Cost Estimating and Assessment Guide12 and the GAO 

Schedule Assessment Guide13

 12

compiled best practices corresponding to 

the four characteristics of high-quality, reliable cost and schedule 

estimates, respectively:

GAO-09-3SP.

13GAO-12-120G.
Page 11 GAO-14-231 Plutonium Disposition Program

• The characteristics of a high-quality, reliable cost estimate are 

comprehensive, well-documented, accurate, and credible. For 

example, (1) a comprehensive estimate has enough detail to ensure 

that cost elements are neither omitted nor double counted, (2) a welldocumented estimate allows for data it contains to be traced to source 

documents, (3) an accurate estimate is based on an assessment of 

most likely costs and has been adjusted properly for inflation, and 

(4) a credible estimate discusses any limitations because of 

uncertainty or bias surrounding data or assumptions. Our cost 

estimating guide also lays out 12 key steps that should result in highquality cost estimates. For example, one of the steps is to conduct an 

independent cost estimate––that is, one generated by an entity that 

has no stake in approval of the project but uses the same detailed 

technical information as the project estimate. Having an independent 

entity perform such a cost estimate and comparing it with a project 

team’s estimate provides an unbiased test of whether a project team’s 

estimate is reasonable.

• The four characteristics of a high-quality, reliable schedule are 

comprehensive, well-constructed, credible, and controlled. For 

example, (1) a comprehensive schedule includes all government and 

contractor activities necessary to accomplish a project’s objectives, 

(2) a well-constructed schedule sequences all activities using the 

most straightforward logic possible, (3) a credible schedule uses data 

about risks and opportunities to predict a level of confidence in 

meeting the completion date, and (4) a controlled schedule is updated 

periodically to realistically forecast dates for activities.

NNSA identified various drivers of the cost increases for the MOX facility 

and WSB. NNSA’s budget request for fiscal year 2014 summarized the 

cost drivers that NNSA considered to be most significant. In addition, 

NNSA identified some of these drivers in earlier documents, including in 

reports of project reviews conducted in 2011 and 2012, in monthly status 

reports for the projects, and, for the WSB, in the document requesting 

approval for a cost increase. NNSA and contractor officials provided 

additional details on these drivers during interviews with us.

Key drivers NNSA identified for the cost increase for the MOX facility 

included the following:

• DOE’s approval of the cost and schedule before design was 

complete. The head of NNSA’s Office of Acquisition and Project 

Management told us that, judging from the MOX contractor’s design 

costs during construction of the MOX facility, the overall design was 

NNSA Identified 

Various Cost Drivers 

for the Plutonium 

Disposition Program’s 

Construction Projects
Page 12 GAO-14-231 Plutonium Disposition Program

about 58 percent complete when DOE approved the project’s cost 

and schedule estimate in April 2007. In contrast, according to DOE’s 

project management order, to support the development of a cost 

estimate, the design of complex nuclear processing facilities needs to 

be closer to 100 percent complete than the design of basic facilities, 

such as administrative buildings and general purpose laboratories. 

NNSA’s budget request for fiscal year 2014 stated that the cost of 

critical system components for the MOX facility averaged 60 percent 

higher than estimated as a result of approval of these estimates 

before design was complete. According to NNSA and MOX contractor 

officials, after the contractor completed designs for critical system 

components, such as the gloveboxes used in the facility for handling 

plutonium and related infrastructure, equipment suppliers submitted 

higher bids than the contractor anticipated. For example, according to 

the contractor’s Vice President of Operations, a vendor submitted a 

bid in 2008 that was four times the amount the same vendor had 

estimated in 2005.

• Higher-than-anticipated costs to install equipment. For example, the 

MOX contractor estimated in its September 2012 proposal to increase 

the cost of the facility that the labor hours to install each foot of the 

approximately 85 miles of piping in the facility increased by as much 

as 26 percent and that, as facility designs became more definitive, the 

total amount of pipe increased by close to 33 percent over the 

previous estimate. In addition, according to NNSA, the number of 

safety systems needed to meet Nuclear Regulatory Commission 

(NRC) requirements was greater than anticipated, further adding to 

equipment installation costs.14

• The contractor’s difficulty identifying suppliers and subcontractors able 

to fabricate and install equipment meeting nuclear quality assurance 

According to NNSA officials, NNSA 

and the contractor did not have a good understanding of the cost of 

designing the facility to meet NRC requirements related to 

demonstrating the ability to withstand an earthquake. The officials 

explained that the facility’s design is based on a similar facility in 

France but that NRC regulatory requirements differ from those in 

France.

 14The NRC, an independent oversight agency, has general licensing and related 

regulatory authority over the construction and operation of the MOX facility. 42 U.S.C. § 

5842 (2013). NRC issued a construction authorization for the facility in 2005. A license to

operate the facility will only be issued by the NRC once it verifies that the facility’s principal 

structures, systems, and components are properly constructed.
Page 13 GAO-14-231 Plutonium Disposition Program

criteria.

15

• Greater-than-expected turnover of engineering and technical staff. In 

particular, the project lost staff to other nuclear industry projects, 

including projects in neighboring states, resulting in a nearly complete 

turnover of construction management personnel over a period of 

several years and the need to provide training to replacement 

personnel. NNSA identified this driver in its budget request for fiscal 

year 2012. Specifically, the budget request stated that over 15 percent 

of the project’s engineering and technical personnel had left for other 

nuclear industry jobs in the previous year with pay increases of at 

least 25 percent. The budget request further stated that finding 

experienced replacements had become difficult and expensive. 

According to the budget requests for fiscal years 2013 and 2014, the 

loss of experienced engineering and technical staff to other nuclear 

industry projects has continued.

According to NNSA’s review of the MOX project in 2011, the 

project was experiencing the same issues identifying qualified 

suppliers and subcontractors as other nuclear projects across DOE. 

These issues included a higher than expected effort associated with 

attracting qualified vendors and, after vendors were selected, 

responding to questions or correcting noncompliance with 

requirements. For example, according to NNSA and the MOX 

contractor, the contractor needed to station quality assurance 

personnel at supplier and subcontractor locations to oversee 

activities.

• Change in scope of the project to add capability to the MOX facility to 

produce plutonium feedstock. As part of its decision to cancel plans 

for a stand-alone PDCF and to instead meet feedstock requirements 

through existing facilities, NNSA directed the MOX contractor to 

include feedstock capability in its September 2012 proposal to 

increase the cost of the facility. The contractor’s proposal included an 

estimate of $262.3 million to add feedstock capability.

In identifying these drivers of the cost increase for the MOX facility, NNSA

did not identify the dollar amount associated with each cost driver. An 

NNSA official said that the MOX contractor’s system for tracking and 

reporting on cost and schedule performance could potentially be used to 

determine dollar amounts that each driver added to the overall cost 

increase—which is one possible use of such a system—but that doing so 

 15Nuclear quality assurance criteria cover the design, fabrication, construction, and testing 

of structures, systems, and components used in nuclear power plants and other nuclear 

facilities. 10 C.F.R. pt. 50, app. B (2013).
Page 14 GAO-14-231 Plutonium Disposition Program

would be time-consuming and difficult. As a result, NNSA officials could 

not substantiate the relative importance of the cost drivers. For example, 

NNSA officials said they had not conducted a formal analysis to back up 

an estimate, which they had made when we first discussed the cost 

drivers with them, that lack of design maturity of critical system 

components accounted for more than half of the increase. In reviewing 

the MOX contractor’s system, we found that, as NNSA officials stated, 

using the system to determine the dollar amounts each driver added to 

the cost increase would be difficult—for example, because the system’s 

identification of cost increases at a summary level, such as site 

construction support, did not correspond to the cost drivers identified by 

NNSA.

Key cost drivers NNSA identified for the WSB included the following:

• Higher-than-anticipated bids for the construction subcontract.

16

• Design errors, omissions, and inconsistencies. According to the 

NNSA federal project director, the WSB contractor and subcontractor 

made hundreds of design changes, which led to an additional cost 

increase in the construction subcontract. According to NNSA’s log of 

design changes, as of August 2013, design changes increased the 

cost of the construction subcontract by about $15 million, from $91.5

According to the NNSA federal project director for the WSB, the WSB 

contractor received two bids in 2009 from prospective construction 

subcontractors that both came in at about $26 million higher than the 

contractor’s estimate. NNSA officials did not explain the reason for the 

difference, stating that the bidders were not required to provide details 

of their estimates. The federal project director said that NNSA 

supported the WSB contractor awarding the construction subcontract, 

despite the higher cost, in order to maintain the schedule for 

completing the WSB in time to support the start-up of the MOX facility. 

According to NNSA officials, the project applied cost savings from 

earlier work to cover part of the increased cost of the construction 

subcontract and had sufficient contingency—the portion of a project’s 

budget that is available to account for uncertainties in the project’s 

scope—to absorb the remainder of the increase. Consequently, 

however, contingency to absorb further cost increases as construction 

progressed was reduced.

 16The subcontract included all construction activities for the WSB with the exception of 

early site work, such as installation of underground utilities.
Page 15 GAO-14-231 Plutonium Disposition Program

million to $106.5 million. The federal project director said that, unlike 

the design of the MOX facility, the design of the WSB was about 90 

percent complete at the start of construction. A September 2008 

report of NNSA’s independent review of the WSB prior to approval of 

the cost and schedule estimate found that the design was essentially 

complete. Nevertheless, according to the federal project director, 

design changes were needed because of constructability issues, such 

as equipment that met specifications in design documents not being 

available by the time the project reached construction.

• Schedule delays resulting from the construction subcontractor not 

meeting required targets. According to the NNSA federal project 

director’s feedback on the WSB contractor’s performance in 

September 2009, NNSA had concerns related to the project schedule 

and the ability to meet the completion date in part because of a 

delayed start in the construction subcontract. By the time NNSA

approved the cost increase for the WSB in December 2012, schedule 

delays in the construction subcontract had grown to 15 months. The 

approved cost increase included about $30 million in the contractor’s 

delay-related costs because NNSA’s contract for the WSB is costreimbursable.

The actual cost attributable to the WSB may be even higher depending 

on the outcome of a lawsuit filed by the subcontractor against the WSB 

contractor related to design changes and schedule delays that increased 

the subcontractor’s costs in excess of the amount specified in its fixedprice subcontract. The approved cost increase for the WSB included 

contingency to account for the possibility of higher costs incurred by the 

construction subcontractor.
Page 16 GAO-14-231 Plutonium Disposition Program

NNSA has not analyzed the underlying, or root, causes of the close to $3 

billion in construction cost increases for the MOX facility and WSB.17

DOE’s project management order requires that lessons learned be 

captured throughout a project to allow for the exchange of information 

within DOE in the context of project management and to benefit future 

endeavors. However, the project management order does not include a 

requirement for a root cause analysis of projects experiencing significant 

cost increases or schedule delays. NNSA officials said that they decide 

on a case-by-case basis whether to conduct a root cause analysis.18

Documentation NNSA provided to us on the cost drivers for the MOX 

facility and WSB do not provide clear details about the causes of the cost 

increases. Such details can be found in a root cause analysis, which 

would help address questions about why the drivers identified by NNSA 

occurred and help inform lessons learned. Key questions about the cause 

of the key drivers include the following:

In 

contrast, under the Weapon Systems Acquisition Reform Act of 2009, the 

Department of Defense must perform a root cause analysis of a cost 

increase that exceeds a certain threshold.

• DOE’s reasons for approving a cost and schedule estimate for the 

MOX facility before the design was complete, even though a July 

2006 review of the project found that the cost estimate’s basis on

portions of the design that were less than 50 percent complete posed 

a risk to the project. Similarly, a root cause analysis would address

why one of the drivers of the cost increase for the WSB identified by 

 17As described by DOE in an April 2008 report on its departmentwide effort to assess 

underlying causes for its project management challenges, a root cause analysis is a 

process involving the individuals knowledgeable of and directly responsible for managing 

DOE contracts and projects answering a challenging series of questions as to why a 

situation, event, or condition existed. The process continues with the identification, 

prioritization, and implementation of recommended solutions or corrective measures.

18For example, NNSA tasked a construction management contractor to identify the root 

causes associated with the need to increase the height of the Uranium Processing Facility 

planned for construction in Oak Ridge, Tennessee, to ensure that processing equipment 

would fit into the facility. The change to the facility’s design resulted in approximately $540 

million in additional costs. The root cause analysis focused not only on identifying lessons 

learned but also on understanding why the space within the facility became a major 

design issue late in the final design and recommending actions to fix the identified causes 

to prevent recurrence of similar negative outcomes. For further information on the cost 

increase for this facility, see GAO, Nuclear Weapons: Factors Leading to Cost Increases 

with the Uranium Processing Facility, GAO-13-686R (Washington, D.C.: July 12, 2013).

NNSA Has Not 

Analyzed Root 

Causes of the Cost 

Increases for the 

Plutonium Disposition 

Program’s 

Construction Projects
Page 17 GAO-14-231 Plutonium Disposition Program

NNSA was design errors, omissions, and inconsistencies, given that a 

review prior to approval of the project’s cost and schedule estimate 

found that most of the design was ready for construction.

• The extent to which NNSA and its contractors shared responsibility for 

cost drivers, such as the greater-than-anticipated number of safety 

systems needed in the MOX facility to meet NRC requirements. 

According to NNSA officials, the department hired the MOX contractor 

because it considered the contractor to be well-qualified to engineer 

and estimate all of the safety systems for the facility, taking into 

account NRC requirements. However, the record for DOE’s approval 

of the cost and schedule estimate for the facility shows that DOE was 

aware of complexities in adapting MOX technology to comply with 

NRC requirements. Specifically, the minutes from DOE’s July 2006 

meeting to request approval of the estimate stated that these 

complexities had already contributed to a $1.1 billion increase in the 

estimated cost.

• The sufficiency of measures DOE took to ensure that the cost 

estimate for the MOX facility it approved in 2007 reflected an 

awareness of market conditions, such as the availability of suppliers 

and subcontractors with the ability and experience to meet nuclear 

quality assurance criteria. As required under the MOX contract, in 

October 2006—before DOE approved the cost and schedule estimate 

for the facility—the contractor submitted a construction market 

analysis report, which stated that the contractor had experienced 

trouble obtaining qualified suppliers and that the subcontractor pool 

using nuclear quality standards had been decreasing due to inactivity 

in the nuclear industry. However, the report provided limited detail and 

did not include recommendations to address availability of qualified 

suppliers.

• The thoroughness of DOE’s review, required under DOE’s project 

management order, to ensure that the WSB contractor’s system for 

tracking and reporting on cost and schedule performance provided 

accurate information. DOE recertified the contractor’s system in 

December 2011 after identifying and closing out several corrective 

actions and continuous improvement opportunities. However, DOE 

found additional problems with the system after January 2012, when 

the WSB contractor informed NNSA that schedule delays for the 

project were greater than the contractor previously revealed. Based in 

part on the contractor’s revelations, DOE reexamined the contractor’s 

system and suspended its certification in November 2012.

• The corrective actions NNSA and its contractors took after periodic 

project reviews identified problems, including problems cited by NNSA 

as drivers of cost increases for the MOX facility and WSB. For 

example, multiple reviews of the MOX facility found that costs to 
Page 18 GAO-14-231 Plutonium Disposition Program

install equipment were underestimated. A July 2006 review found that 

installation for electrical; piping; and heating, ventilation, and airconditioning equipment were underestimated by close to $160 million 

and nearly 3 million labor hours. NNSA’s project reviews of the facility 

in 2011 and 2012 continued to raise concerns about unrealistic 

installation rates.

• The responsiveness of NNSA project managers to emerging cost and 

schedule issues. Without a review of the timing of NNSA initiating the 

process of increasing the projects’ cost and schedule estimates, it is 

not clear whether NNSA acted in a timely manner or whether project 

cost and schedule indicators warranted earlier action. For example, 

an NNSA review of the MOX facility in the spring of 2011 found that 

the most significant risk to delivering the project within cost centered 

on the ability of the project team to identify about $364 million in 

savings to offset expected cost growth, but NNSA did not initiate the 

process of increasing the project’s cost and schedule estimates until 

January 2012.

Without a root cause analysis, it is uncertain whether NNSA will be able 

to accurately identify underlying causes of the cost increases for the MOX 

facility and WSB in order to identify and implement corrective measures 

and identify lessons learned to share with and apply to other DOE 

construction projects.

After determining that the performance of the contractors for the MOX 

facility and WSB contributed to the projects’ construction cost increases, 

NNSA took steps to hold the contractors accountable for their 

performance by withholding fees specified under the contracts. 

Specifically, NNSA withheld portions of two of the four types of the MOX 

contractor’s fees and 41 percent of the WSB contractor’s fees.

NNSA withheld portions of two of the four types of fees that the MOX 

contractor could earn under the contract for construction of the facility—

incentive fees and award fees. In total, NNSA withheld $45.1 million or 

close to one-third of all fees the contractor could earn as of November 

2013. Under the terms of the MOX contract, the contractor could still earn 

incentive fees that have been withheld, but only if it completes the overall 

project within cost and schedule. Table 1 summarizes fees paid to and 

withheld from the contractor as of November 2013.

NNSA Has Taken 

Steps to Hold 

Contractors 

Accountable for Cost 

Increases by 

Withholding Fees

NNSA Withheld Portions 

of Two of the Four Types 

of the MOX Contractor’s 

Fees
Page 19 GAO-14-231 Plutonium Disposition Program

Table 1: Types of Fees for Construction of the MOX Facility and Amounts Paid, Withheld, and Remaining to Be Earned as of 

November 2013

Dollars in millions

Fee type Purpose

Total available to 

be earned under 

the MOX contract

Amount 

paid

Amount 

withheld

Percentage 

withheld

Amount remaining 

under the MOX 

contracta

Incentiveb Encourage project 

completion within cost 

and schedule

$76.9 $29.1 $36.5 56% $11.3

Awardc Ensure performance in 

areas other than cost 

and schedule

53.1 24.0 8.6 26 20.5

Milestone Motivate completion of 

critical tasks

61.0 30.8 0 0 30.2

Fixed Reward the contractor 

for work during contract 

negotiations

15.7 15.7 0 0 0

Total $206.6 $99.6 $45.1 31% $62.0

Source: GAO analysis of NNSA records of fee payments to the MOX contractor.

Note: Dollar figures do not add up to $206.6 million due to rounding.

a

The MOX contractor’s September 2012 proposal for increasing the cost of the MOX facility included 

increases to incentive, milestone, and award fees specified under the contract.

b

The amount of remaining incentive fees covers fiscal years 2014 and 2015. Of the $29.1 million in 

incentive fees paid to the contractor, $21.6 million remains provisional, meaning that NNSA can 

require that the fees be paid back as a result of the project not being completed within cost. In 

addition, under the terms of the MOX contract, the contractor could earn the $36.5 million in withheld 

incentive fees if it completes the overall project within cost and schedule.

c

NNSA made award fee payments for fiscal years 2008 through 2012, increasing the amount withheld 

from 11 percent in fiscal year 2008 to 50 percent in fiscal year 2012. The amount remaining covers 

fiscal years 2013 through 2016.

Details of fees NNSA withheld and paid under the MOX contract include 

the following:

• Incentive fees. NNSA did not pay $36.5 million or over half of the 

$65.6 million in incentive fees that the MOX contractor could earn 

from fiscal year 2008, when construction began, through fiscal year 

2013. Of the $29.1 million in incentive fees paid to the contractor, 

$21.6 million remains provisional, meaning that NNSA can require 

that the fees be paid back as a result of the project not being 
Page 20 GAO-14-231 Plutonium Disposition Program

completed within cost.19 The amount not paid represented the 

contractor’s entire incentive fees for fiscal years 2011 through 2013. 

Specifically, under the terms of the MOX contract, NNSA can withhold 

quarterly payments of incentive fees if an increase in the projected 

cost to complete the MOX facility exceeds $200 million. NNSA began 

withholding incentive fees for the first quarter of fiscal year 2011 

when, for the first time, the increase in the projected cost to complete 

the facility exceeded this threshold. NNSA memos for subsequent 

quarters in fiscal year 2011 noted that the project’s cost and schedule 

metrics continued to worsen, reducing the likelihood of resumption of 

payments. In a July 2011 letter to the contractor explaining its 

rationale for not resuming payments, NNSA stated that it was 

sensitive to the potential impacts of the “nuclear renaissance”—the 

contractor’s term for the resurgence of U.S. nuclear engineering and 

manufacturing capability after being dormant for more than 20 years, 

which the contractor stated limited the availability of qualified suppliers 

and subcontractors and led to staff turnover and higher-thananticipated costs to install equipment. However, NNSA stated that 

such impacts would not necessarily overcome other evidence 

showing that the contractor was not meeting the overarching goal of 

the incentive fees, which is that the facility be completed within cost.20

• Award fees. NNSA withheld $8.6 million or about a quarter of the 

$32.6 million in award fees that the MOX contractor could earn from 

fiscal year 2008 through fiscal year 2012. The amount withheld 

included about half of the fees the contractor was eligible to earn in 

fiscal year 2012. NNSA’s award fee evaluation for fiscal year 2012 

cited various factors, such as poor construction planning; less than 

optimal coordination of work; and overly conservative specifications 

for installation of fire doors, resulting in delays and unnecessary costs. 

In contrast, NNSA paid $24.0 million in award fees for performance in 

 19The NNSA contracting officer for the MOX facility said that, as an alternative to taking 

back the provisional fees, NNSA may seek to use the $21.6 million to modify the MOX 

contract’s cost-sharing provision to provide the contractor an incentive to limit further cost 

increases. The contract included a provision whereby the contractor would earn a portion 

of every dollar that total allowable, final project costs are less than the project’s approved 

cost estimate, as adjusted for purposes of calculating the amount of cost share. In 

contrast, the contractor would owe a portion of every dollar that final project costs exceed 

the project’s approved cost estimate, as adjusted.

20In technical comments on a draft of this report, NNSA stated that, because it hired a 

contractor with knowledge of both the marketplace for nuclear work and the MOX project 

requirements, it expected project estimates submitted by the contractor to account for any 

risk associated with the nuclear renaissance.
Page 21 GAO-14-231 Plutonium Disposition Program

other areas, such as maintaining a high level of worker safety—an 

area in which the contractor has consistently performed well, 

according to NNSA’s award fee evaluations.

• Milestone fees. NNSA did not withhold any milestone fees and instead 

paid milestone fees of $30.8 million for tasks with deadlines ranging 

from February 2009 to March 2014. Examples of tasks for which 

NNSA paid milestone fees (some of which the MOX contractor 

completed early) included completing the roof, installing the first 

glovebox, constructing a technical support building, and completing a 

start-up plan for the facility. According to the NNSA officials, although 

NNSA did not withhold milestone fees, NNSA stopped paying any of 

the $30.2 million in remaining milestones fees as part of an 

understanding with the contractor to renegotiate the amount of and 

conditions for earning milestone fees.

• Fixed fees. According to the contracting officer, NNSA did not 

withhold any of the $15.7 million in fixed fees—the total amount of 

fixed fees for construction-related work under the MOX contract. 

NNSA included these fees in the contract to reward the contractor for 

work performed during contract negotiations, when other fees had not 

yet been negotiated.

In a March 2013 analysis of the WSB contractor’s performance, the 

NNSA contracting officer for the WSB recommended that the contractor 

should be held accountable for performance failures that contributed to 

the project’s cost increase. For example, the analysis stated that the 

contractor did not require the subcontractor to add crews or take other 

steps to correct delays until almost 2 years after the federal project 

director began expressing concerns about the delays. In accordance with 

this assessment, NNSA withheld $7.7 million or about 40 percent of the 

$18.9 million in performance incentive fees that the WSB contractor could 

earn from fiscal year 2009, when construction began, through fiscal year 

2012, for the portion of fees allocated to construction of the WSB under 

the management and operation contract for the Savannah River Site. 

Most of the fees withheld were for the contractor’s performance in fiscal 

years 2011 and 2012 (see table 2). In particular, NNSA withheld $3.3 

million of the $6.9 million in fees the contractor could earn in fiscal year 

2011 and $3.9 million of the $4.0 million in fees the contractor could earn 

in fiscal year 2012. The fees withheld were tied to various performance 

measures, which DOE acquisition regulations require be established prior 

to the start of each evaluation period. Performance measures NNSA 

established included meeting the schedule for testing various types of 

equipment, providing engineering support to and coordinating with the 

NNSA Withheld 41

Percent of the WSB 

Contractor’s Fees through 

Fiscal Year 2012
Page 22 GAO-14-231 Plutonium Disposition Program

construction subcontractor, and maintaining the project within preestablished cost and schedule metrics.

The $3.3 million in fees withheld for fiscal year 2011 included $2 million 

that NNSA took back—that is, was paid back by the contractor—after 

making its fee determination for the contractor. Specifically, according to 

a December 2012 letter from the NNSA contracting officer to the 

contractor, the fiscal year 2011 fee determination was premised on the 

contractor’s statements that schedule delays were recoverable and that 

the project would be completed within the approved cost estimate. Shortly 

after NNSA made its fee determination, however, the contractor notified 

NNSA that the project was further behind schedule than previously 

represented and that cost factors not included in the contractor’s system 

for tracking and reporting on cost and schedule performance would result 

in a cost overrun. The contracting officer’s letter stated that NNSA would 

have reduced the contractor’s fee if it had known the extent of delays and 

cost overruns when it made its fee determination, and NNSA required the 

contractor to repay $4 million. In May 2013, NNSA agreed to a settlement 

with the contractor to reduce the amount taken back to $2 million after the 

contractor appealed NNSA’s initial demand.

Table 2: Fees Paid and Withheld for Construction of the WSB through Fiscal Year 

2012

Dollars in millions

Fiscal year

Amount 

paid

Amount 

withheld

Percentage 

withheld

Total available to 

be earned

2009 $1.5 < $0.1a 2% $1.6

2010 5.8 0.6 9 6.4

2011 3.7 3.3b 47 6.9

2012 0.2 3.9 96 4.0

Totalc $11.2 $7.7 41% $18.9

Source: GAO analysis of NNSA data on fees paid to the WSB contractor.

Note: Dollar figures may not add up to totals due to rounding.

a

NNSA withheld $25,000 for fiscal year 2009.

b

The fees withheld for fiscal year 2011 included $2 million that NNSA took back from the amount it 

originally paid to the WSB contractor.

c

To provide an incentive to the contractor to improve its performance on the WSB, NNSA also set 

aside a total of $6 million in fees for the project in fiscal years 2013 and 2014. According to the NNSA 

contracting officer for the WSB, NNSA has not yet decided how to allocate fees for fiscal year 2015 

under the overall management and operation contract for the Savannah River Site, including for the 

WSB project.
Page 23 GAO-14-231 Plutonium Disposition Program

In addition to withholding fees, in a June 2012 letter to the contractor, 

NNSA’s contracting officer questioned why she should not conclude that

the contractor’s actions rose to the level of gross negligence or willful 

misconduct, warranting disallowance of costs, meaning that the 

contractor would bear part of the cost increase resulting from the project’s 

schedule delays.21 For example, the letter stated that the contractor’s 

system for tracking and reporting on cost and schedule performance did 

not meet industry standards and impeded NNSA’s ability to understand 

the potential impact of delays in construction of various segments of the 

project on the final delivery date. According to NNSA officials, NNSA is 

waiting until after completion of WSB construction, and total construction 

costs are known, to determine unallowable costs.

NNSA’s most recent cost and schedule estimates for the Plutonium 

Disposition program did not fully reflect the characteristics of high-quality, 

reliable estimates as established by best practices used throughout 

government and industry and documented in the GAO Cost Estimating 

and Assessment Guide and GAO Schedule Assessment Guide. 

Specifically, (1) NNSA’s draft April 2013 life-cycle cost estimate for the 

overall program was partially comprehensive, partially well-documented, 

and partially accurate but did not meet any of the best practices for a 

credible estimate; (2) the MOX contractor’s September 2012 proposal for 

increasing the cost of the MOX facility was substantially comprehensive 

but partially well-documented and accurate and minimally credible; and 

(3) the WSB contractor’s February 2013 monthly update to its schedule 

estimate was minimally well-constructed and partially met the other three 

 21In order for the government to reimburse a contractor’s costs, the costs must be 

reasonable. FAR, 48 C.F.R. § 31.201-2, -3 (2013). Evidence of gross negligence or willful 

misconduct could provide a basis for a contracting officer or court to disallow costs as 

unreasonable under the regulation, but a contractor’s actions do not need to rise to this 

level to be determined unreasonable, See Kellogg Brown & Root Servs. v. United States, 

2013 U.S. App. LEXIS 18447, at *21-2, (D.C. Cir. Sept. 5, 2013).

Estimates for the 

Plutonium Disposition 

Program’s Life-cycle 

Cost and

Construction Projects 

Did Not Meet All Best 

Practices for 

Reliability
Page 24 GAO-14-231 Plutonium Disposition Program

characteristics of a reliable schedule—comprehensive, credible, and 

controlled.22

In developing its draft April 2013 life-cycle cost estimate of $24.2 billion 

for the Plutonium Disposition program, NNSA followed several of the 12 

key steps for developing high-quality cost estimates, including defining 

the estimate’s purpose, defining the program’s characteristics, and 

obtaining the data. NNSA did not follow other key steps, however, such 

as conducting an independent cost estimate. As a result, the estimate 

was not reliable. In particular, NNSA’s draft life-cycle cost was partially 

comprehensive, partially well-documented, and partially accurate but did 

not meet any of the best practices for a credible estimate.

Table 3 summarizes the major components of NNSA’s draft April 2013 

life-cycle cost estimate. The estimate assumed that the MOX facility 

would start operations in November 2019 and that it would take 

approximately 15 years to complete the mission to dispose of 34 metric 

tons of surplus weapons-grade plutonium.

Table 3: NNSA’s Draft Life-cycle Cost Estimate for the U.S. Plutonium Disposition 

Program, as of April 2013

Dollars in millions

Facility or 

program 

component Type of cost

Actual 

costsa Projected 

costsb Total

MOX Fuel 

Fabrication Facility

Construction $3,435.6 $3,988.6 $7,424.2

Operations and maintenance 2.7 8,256.1 8,258.8

WSB Construction 265.1 132.7 397.9

Operations and maintenance - 1,910.2 1,910.2

PDCF Construction 730.1 - 730.1

 22We based the ratings used in our analysis on the average of ratings for individual best 

practices included in each characteristic: “Not met” means an estimate provided no 

evidence that satisfied the best practice. “Minimally met” means an estimate provided 

evidence that satisfied a small portion of the best practice. “Partially met” means the 

estimate provided evidence that satisfied about half of the best practice. “Substantially 

met” means the estimate provided evidence that satisfied a large portion of the best 

practice. “Fully met” means the estimate provided complete evidence that satisfied the 

entire best practice.

NNSA Did Not Follow All 

Key Steps for Developing 

a Reliable Life-cycle Cost 

Estimate for the Plutonium 

Disposition Program
Page 25 GAO-14-231 Plutonium Disposition Program

Dollars in millions

Facility or 

program 

component Type of cost

Actual 

costsa Projected 

costsb Total

MIFT Operations and maintenance 681.7 4,258.9 4,940.6

PDIP Operations and maintenance 65.2 427.6 492.8

Total $5,180.6 $18,974.1 $24,154.7

Source: GAO analysis of NNSA data.

Note: Dollar figures may not add up to totals due to rounding.

a

Actual costs cover fiscal year 1999 through fiscal year 2012. Data is based on actual costs incurred.

b

Projected costs cover fiscal year 2013 through fiscal year 2036. Data is based on projected funding 

required.

Table 4 lists the steps, or best practices, necessary for developing a highquality cost estimate. Appendix II summarizes our assessment of NNSA’s 

process for developing its draft life-cycle cost estimate against the steps 

that should result in the four characteristics of a high-quality cost 

estimate.

Table 4: Four Characteristics of a High-Quality Cost Estimate with Their 

Corresponding 12 Key Cost Estimating Steps (or Best Practices)

Characteristic 12 Steps (or best practices)

Comprehensive • Develop the estimating plan

• Determine the estimating structure

Well-documented • Define the estimate’s purpose

• Define the program’s characteristics

• Identify ground rules and assumptions

• Obtain the data

• Document the estimate

• Present the estimate to management for approval

Accurate • Develop the point estimatea

• Update the estimate to reflect actual costs and changes

Credible • Compare the point estimate to an independent cost estimatea

• Conduct a sensitivity analysis

• Conduct a risk and uncertainty analysis

Source: GAO.

a

As described in the GAO Cost Estimating and Assessment Guide, developing the point estimate and 

comparing it with an independent cost estimate are separate parts of a single step. For purposes of 

assessing the extent to which a cost estimate achieves the characteristics of a high-quality cost 

estimate, developing the point estimate contributes to accuracy, and comparing the point estimate 

with an independent cost estimate contributes to credibility.
Page 26 GAO-14-231 Plutonium Disposition Program

Our assessment of NNSA’s process for developing its draft life-cycle cost 

estimate included the following observations:

• Comprehensive. The draft life-cycle cost estimate was partially 

comprehensive because work breakdown structures were developed 

for the MOX and WSB projects and other components of the program, 

but NNSA had not formalized a program-level work breakdown 

structure. A typical work breakdown structure provides a clear picture 

of what needs to be accomplished, how the work will be done, and a 

basis for identifying resources and tasks for developing a cost 

estimate. Without a program-level work breakdown structure, NNSA 

cannot ensure that its life-cycle cost estimate captures all relevant 

costs, which can mean cost overruns.

• Well-documented. The draft life-cycle cost estimate was partially welldocumented because NNSA defined the estimate’s purpose and the 

program’s characteristics, but it did not develop a single document to 

describe data sources and steps taken in developing the estimate—

such as applying escalation rates to account for inflation—so that the 

estimate could be replicated by someone other than those who 

prepared it. In addition, NNSA stated that a document identified the 

estimate’s ground rules and assumptions but that the assumptions 

have changed frequently, hindering development of a life-cycle cost 

estimate. Examples of changes in assumptions not reflected in 

NNSA’s draft April 2013 estimate included the slowdown of activities 

during the assessment of alternative plutonium disposition strategies 

and NNSA’s plans to increase the amount of plutonium disposed of as 

MOX fuel.

• Accurate. The draft life-cycle cost estimate was partially accurate in 

that NNSA followed the best practice for developing a point 

estimate—a best guess at a cost estimate usually falling between best 

and worst case extremes. NNSA also updated the estimate 

periodically to include actual costs and changes to program and 

project requirements. However, NNSA did not use a formal system for 

tracking and reporting on cost and schedule performance to update 

the estimate, limiting the ability of someone other than those who 

prepared the estimate to check the estimate’s accuracy and to identify 

when, how much, and why the program cost more or less than 

planned.

• Credible. The draft life-cycle cost estimate was not credible because 

NNSA did not conduct an independent cost estimate to provide an 

unbiased test of whether its estimate was reasonable, a formal 

sensitivity analysis to examine the effects of changing assumptions 

and ground rules, or a risk and uncertainty analysis to assess 

variability in point estimates due to factors such as errors and cost 
Page 27 GAO-14-231 Plutonium Disposition Program

estimators’ inexperience or biases. NNSA conducted such analyses 

for portions of its life-cycle cost estimate, but not for the entire 

estimate. For example, NNSA’s Plutonium Disposition program office 

arranged for another office within NNSA to conduct an independent 

assessment of the MOX facility’s operations costs, but not for the 

program’s entire life-cycle cost.

NNSA did not follow all key steps for developing high-quality cost 

estimates in part because it did not have a requirement to develop its lifecycle cost estimate. According to NNSA officials, DOE’s project 

management order includes requirements for development of cost and 

schedule estimates for a project, such as the MOX facility or WSB, but 

does not specify equivalent requirements for a program like Plutonium 

Disposition, which includes multiple projects, as well as supporting 

activities. As a result, when developing the life-cycle cost estimate for the 

Plutonium Disposition program, NNSA officials used an ad hoc approach 

to adapt requirements for managing projects in DOE’s project 

management order. NNSA officials also said that its April 2013 life-cycle 

cost estimate did not include all the steps of a high-quality, reliable 

estimate in part because NNSA considered the estimate to be draft and, 

therefore, had not fully implemented plans for developing it.

In the absence of a specific requirement in DOE’s project management 

order for developing a life-cycle cost estimate for a program, NNSA 

officials said they developed a life-cycle cost estimate for the Plutonium 

Disposition program for several reasons. According to these officials, 

these reasons included that the cost of the program is largely made up of 

capital projects, such as the MOX facility, and that requirements for 

congressional budget submissions specify that the full life-cycle cost of 

such projects be presented. In addition, each year NNSA must submit to 

Congress its estimated expenditures covering the fiscal year with respect 

to which the budget is submitted and at least the four succeeding fiscal 

years. NNSA officials said that, to accurately estimate expenditures for 

this 5-year period, they needed to develop a life-cycle cost estimate for 

the overall Plutonium Disposition program. An NNSA official noted that 

NNSA plans to use a version of its life-cycle cost estimate as a basis for 

evaluating alternative strategies to dispose of surplus weapons-grade 

plutonium.
Page 28 GAO-14-231 Plutonium Disposition Program

The MOX contractor’s September 2012 proposal for increasing the cost of 

the MOX facility was substantially comprehensive but was partially welldocumented, partially accurate, and minimally credible. The contractor’s 

estimate did not fully reflect the characteristics of a high-quality, reliable 

estimate in part because it was a proposal, as opposed to an approved 

cost estimate. For example, one of the best practices for a welldocumented estimate—and a requirement of DOE’s project management 

order—is that a cost estimate be reviewed and accepted by management. 

Because DOE had not approved it and instead postponed its review and 

approval pending the outcome of NNSA’s assessment of alternative 

plutonium disposition strategies, the contractor’s estimate partially met 

this best practice. This best practice would be met by DOE’s completion 

of its review and approval of a new estimate for the MOX facility, 

assuming the assessment of alternative plutonium disposition strategies 

maintains the current strategy of disposing plutonium as MOX fuel.

Though the contractor’s September 2012 estimate did not fully reflect the 

characteristics of a high-quality estimate and cannot be considered 

reliable, the MOX contractor began using it as a provisional baseline for 

purposes of monthly reporting on the project’s cost and schedule 

performance. Specifically, as directed by NNSA, the contractor began a 

transition in June 2012 to report its monthly performance against the 

contractor’s proposed estimate of $7.7 billion. The contractor completed 

the transition and ceased any reporting of performance against the 

previously approved estimate early in 2013. Managing projects that no 

longer have an approved cost and schedule estimate is a challenge 

because cost and schedule estimates provide a baseline for measuring 

progress. At a July 2013 hearing, the Deputy Secretary of Energy noted 

that not having such a baseline is the point of maximum risk of 

unrestricted cost growth on a project.

Appendix III summarizes our assessment of how well the MOX 

contractor’s proposal met the characteristics of a high-quality estimate. 

Our assessment included the following observations:

• Comprehensive. The proposal was substantially comprehensive in 

that it included all construction costs, as defined by the statement of 

work under the MOX contract. The proposal was not fully 

comprehensive, however, because it only partially met certain best 

practices for a comprehensive estimate, such as documenting all 

cost-influencing ground rules and assumptions. The proposal partially 

met this best practice because it did not provide justifications for some 

Contractor’s Proposed 

Estimate for the MOX 

Facility Did Not Meet Most 

Best Practices for 

Reliability
Page 29 GAO-14-231 Plutonium Disposition Program

assumptions, such as not more than 10 percent of the supports for 

piping systems being nonstandard and requiring unique designs.

• Well-documented. The proposal was partially well-documented 

because it described in sufficient detail the calculations performed and 

the estimating methodology used to derive the cost of each element in 

the work breakdown structure. However, it did not provide all types of 

information specified in best practices for a well-documented 

estimate, such as how data on labor and travel costs were 

normalized. Data normalization is often necessary to ensure 

comparability because data can be gathered from a variety of sources 

and in different forms that need to be adjusted before being used.

• Accurate. The proposal was partially accurate in that it appeared to 

adjust cost elements for inflation and contained only a few minor 

mistakes, but the contractor did not update its proposal with actual 

costs incurred after it developed the proposal and submitted it to 

NNSA in September 2012. NNSA and contractor officials agreed that 

the estimate was no longer an accurate reflection of the cost to 

complete construction—for example, because the proposal assumed 

a higher level of funding than the project received in fiscal year 2013. 

The officials said that, if the MOX project continues, the contractor 

would need to prepare a new proposal that includes costs for work 

conducted after the initial proposal was developed.

• Credible. The proposal was minimally credible because DOE halted 

its independent cost estimate of the proposal pending the outcome of 

NNSA’s assessment of alternative plutonium disposition strategies. 

Moreover, the proposal did not include a formal sensitivity analysis to 

examine the effects of changing assumptions and ground rules, and it 

provided no evidence that major cost elements were cross-checked to 

determine whether alternative cost-estimating methods produced

similar results. Finally, the proposal included an analysis of risks, such 

as difficulty attracting and retaining workers, and uncertainty in 

estimating materials and other costs. On the basis of this analysis, the 

proposal included a total of $713.1 million to account for risks and 

uncertainty—$641.4 million for the original scope of the MOX facility 

and $71.7 million for the addition of plutonium feedstock capability 

(see table 5). However, the contractor did not properly conduct or 

clearly document all steps in the analysis to determine the amount of 

funding to account for risks and uncertainty that could increase the 

cost of the project.
Page 30 GAO-14-231 Plutonium Disposition Program

Table 5: MOX Contractor’s September 2012 Proposal for Increasing the Project’s 

Cost

Dollars in millions

Scope of work covered by the proposal Type of cost Amount

MOX Fuel Fabrication Facility Construction cost and feesa $6,770.9

Allowances for risks and 

estimate uncertainty

641.4

Addition of plutonium feedstock capability Construction cost and fees 190.6

Allowances for risks and 

estimate uncertainty

71.7

Total $7,674.7 

Source: Shaw AREVA MOX Services, LLC.

Note: Dollar figures do not add up to $7,674.7 million due to rounding.

a

The contractor’s proposal included increases to incentive, milestone, and award fees specified under 

the MOX contract.

The WSB contractor’s February 2013 monthly update to its schedule 

estimate did not fully reflect the characteristics of a high-quality, reliable 

schedule estimate as established by best practices. Specifically, the 

contractor’s schedule estimate was minimally well-constructed and 

partially met the other three characteristics of a reliable, high-quality 

schedule as measured against best practices—comprehensive, credible, 

and controlled. Table 6 shows the characteristics of a high-quality 

schedule estimate and corresponding best practices. Appendix IV 

summarizes our assessment of how well the WSB contractor’s February 

2013 schedule estimate met the characteristics of a high-quality estimate.

Table 6: Four Characteristics of a High-Quality Schedule Estimate with Their 

Corresponding Best Practices

Characteristic Best practices

Comprehensive • Capturing all activities

• Assigning resources to all activities

• Establishing the durations of all activities

Well-constructed • Sequencing all activities

• Confirming that the critical path is valid

• Ensuring reasonable total float

Credible • Verifying that the schedule is traceable horizontally and 

vertically

• Conducting a schedule risk analysis

Contractor’s Schedule 

Estimate for the WSB Did 

Not Meet Most Best 

Practices for Reliability
Page 31 GAO-14-231 Plutonium Disposition Program

Characteristic Best practices

Controlled • Updating the schedule with actual progress and logic

• Maintaining a baseline schedule

Source: GAO.

Our assessment of the WSB contractor’s February 2013 schedule 

estimate included the following observations:

• Comprehensive. The estimate was partially comprehensive in that it 

captured and established the durations of contractor and government 

activities to complete the project but did not capture the remaining 

detailed work to be performed by the construction subcontractor. 

Specifically, it reduced the subcontractor’s 3,851 activities to complete 

its portion of the work to one placeholder activity. According to the 

NNSA federal project director, the WSB contractor reduced the 

subcontractor’s activities to a placeholder because the subcontractor 

submitted unreliable schedules with repeated changes in the 

estimated completion date for its portion of work.

• Well-constructed. The estimate was minimally well-constructed in that 

it sequenced activities in ways that can obscure a schedule’s earliest 

completion date. In addition, the sequencing of activities included 

“merge points”—the convergence of many parallel activities into a 

single successor activity, which decreased the probability of 

successor activities starting on time. For example, performance of an 

assessment of readiness to operate the WSB was preceded by 212 

activities. NNSA officials explained that the merge points resulted 

from the need to complete activities in parallel to meet requirements 

set forth in DOE’s project management order.

• Credible. The estimate was partially credible in that the WSB 

contractor conducted a schedule risk analysis to determine the 

amount of schedule contingency—a reserve of extra time to account 

for risks and ensure completion of the project on time. However, a 

DOE review conducted prior to approval of an increase in the project’s 

cost and a delay in the start of operations found that the results of the 

contractor’s analysis were unreliable—for example, because project 

team members were not consulted regarding risk inputs. As a result, 

the schedule risk analysis did not clearly support the 12 months of 

schedule contingency included in the approved cost increase and 

schedule delay.

• Controlled. The estimate was partially controlled in that, according to 

project officials, the schedule was updated weekly and used to 

measure performance, but no narrative accompanied weekly updates 

to provide decision makers with a log of changes and their effect, if 

any, on the schedule time frame. In addition, project officials did not 
Page 32 GAO-14-231 Plutonium Disposition Program

provide documentation enabling the schedule to be validated, such as 

documentation describing sequencing of activities or assumptions 

used in developing the schedule.

The NNSA federal project director and contractor’s project leader said 

that the contractor had begun to correct problems in the contractor’s 

schedule estimate—for example, by replacing the placeholder for the 

subcontractor’s activities with a schedule of more detailed activities 

independently developed by the contractor. However, delays on the 

project continued after the contractor began correcting the problems. 

Notably, according to DOE’s October 2013 monthly report on the WSB, 

continuing delays in completion of the construction subcontract—one of 

the key drivers NNSA identified for the WSB cost increase—already used 

up about 10 of the 12 months of schedule contingency, placing the 

project’s completion date in jeopardy.

NNSA has identified drivers of the close to $3 billion increase in the 

projected cost to complete the MOX facility and WSB and has taken steps 

to hold the MOX and WSB contractors accountable for their role in the 

cost increases by withholding and taking back fees. However, the various 

drivers identified by NNSA, such as DOE’s approval of the cost and 

schedule estimate for the MOX facility before design was complete, do 

not provide the level of detail that can be found in a root cause analysis. 

In addition, DOE’s project management order requires that lessons 

learned be captured throughout a project but does not include a 

requirement for a root cause analysis when a project exceeds its cost 

estimate, even when a project exceeds its cost estimate by billions of 

dollars. The decision whether to conduct such an analysis is instead 

made on a case-by-case basis. Because NNSA has not conducted a root 

cause analysis to identify the underlying causes of the cost increases for 

the MOX facility and WSB, it cannot provide assurance that it has 

correctly identified the underlying causes to ensure that they will not lead 

to further cost increases as the projects move forward. Further, without a 

root cause analysis, NNSA’s ability to identify recommended solutions 

and lessons learned that could be applied to other projects is lessened. 

Conducting a root cause analysis of the cost increases for the MOX 

facility and WSB could help NNSA address its long-standing difficulties in 

completing projects within cost and on schedule, which has led to NNSA’s 

project management remaining on GAO’s list of areas at high risk of 

fraud, waste, abuse, and mismanagement.

Conclusions
Page 33 GAO-14-231 Plutonium Disposition Program

NNSA has drafted a life-cycle cost estimate of $24.2 billion for the 

Plutonium Disposition program—an important step toward presenting the 

full cost of NNSA’s current strategy to dispose of surplus weapons-grade 

plutonium as MOX fuel. A cost estimate that presents the full cost of 

NNSA’s current plutonium disposition strategy is essential to inform 

NNSA’s ongoing evaluation of alternative plutonium disposition strategies 

and provide Congress with a complete picture of the cost of the program. 

NNSA developed its life-cycle cost estimate even though neither DOE nor 

NNSA required the estimate. In particular, DOE’s project management 

order does not explicitly require that life-cycle cost estimates be 

developed for programs like the Plutonium Disposition program that 

include both construction projects and other efforts and activities not 

related to construction, such as producing plutonium feedstock for the 

MOX facility. In the absence of such a requirement, NNSA followed 

several of the 12 key steps described in the GAO Cost Estimating and 

Assessment Guide for developing high-quality, reliable cost estimates, 

but it did not follow other key steps. Because NNSA did not follow all of 

the steps, the life-cycle estimate for the Plutonium Disposition program is 

not reliable. Similarly, the contractors’ cost and schedule estimates for the 

MOX facility and WSB did not meet all best practices compiled in GAO’s 

guides for preparing high-quality, reliable cost and schedule estimates. 

Not meeting these best practices increased the risk of further cost 

increases and delays for the projects and, because the projects are 

components of NNSA’s life-cycle cost estimate, for the overall Plutonium 

Disposition program.

We are making six recommendations in this report to the Secretary of 

Energy. To identify lessons learned from and provide assurance of 

preventing recurrence of cost increases for the MOX facility and WSB, 

and to develop reliable cost estimates for the Plutonium Disposition 

program, we recommend that the Secretary of Energy direct the DOE and 

NNSA Offices of Acquisition and Project Management and the NNSA 

office responsible for managing the Plutonium Disposition program, as 

appropriate, to take the following four actions:

• Conduct an analysis of the root causes of the cost increases for the 

MOX facility and WSB, such as the causes of the design changes that 

led to cost increases, and identify and prioritize recommended 

solutions.

• Revise and update the program’s life-cycle cost estimate following the 

12 key steps described in the GAO Cost Estimating and Assessment 

Guide for developing high-quality cost estimates, such as conducting 

Recommendations for 

Executive Action
Page 34 GAO-14-231 Plutonium Disposition Program

an independent cost estimate to provide an objective and unbiased 

assessment of whether the estimate can be achieved.

• Ensure that the MOX contractor revises its proposal for increasing the 

cost of the MOX facility to meet all best practices for a high-quality, 

reliable cost estimate—for example, by cross-checking major cost 

elements to determine whether alternative estimating methods 

produce similar results.

• Ensure that the approved cost increase for the WSB is based on a 

schedule that the contractor has revised to meet all best practices for 

a high-quality, reliable schedule estimate, such as reflecting all 

activities (both government and contractor) needed to complete 

construction.

To ensure that future DOE projects benefit from lessons learned that 

reflect the underlying causes of cost increases or schedule delays 

experienced by other projects, and that Congress and DOE have lifecycle cost estimates for DOE programs that include individual 

construction projects, we further recommend that the Secretary of Energy 

take the following two actions to revise DOE’s project management order 

or otherwise implement a departmentwide requirement:

• Require a root cause analysis of all projects that experience cost 

increases or schedule delays exceeding a certain threshold 

established by DOE.

• Require life-cycle cost estimates covering the full cost of programs 

that include both construction projects and other efforts and activities 

not related to construction.

We provided a draft of this product to DOE for comment. In written 

comments, reproduced in appendix V, NNSA stated that the agency and 

DOE generally agreed with our recommendations. In particular, NNSA 

concurred with four of our six recommendations and partially concurred 

with the other two. NNSA described actions it planned to take to 

implement the recommendations with which it concurred and time frames 

for taking these actions. NNSA also provided technical comments, which 

we incorporated into the report as appropriate.

We are pleased that NNSA concurred with our recommendation to 

conduct an analysis of the root causes of the cost increases for the MOX 

facility and WSB and stated that it is planning to conduct such an 

analysis, which was not mentioned during the course of our review. 

NNSA also concurred with our recommendation to revise and update the 

Plutonium Disposition program’s life-cycle cost estimate and stated that it 

Agency Comments 

and Our Evaluation
Page 35 GAO-14-231 Plutonium Disposition Program

would do so after a decision was made on the path forward for the 

program. The path forward could involve the use of alternative strategies 

to dispose of surplus weapons-grade plutonium.

NNSA also concurred with our recommendation to ensure that the MOX 

contractor revises its proposal for increasing the cost of the MOX facility 

to meet all best practices for a high-quality, reliable cost estimate. In its 

comment letter, NNSA stated that it is working with the contractor to 

ensure that the cost estimating processes and procedures are updated 

such that the best practices are met. 

In addition, NNSA concurred with our recommendation to ensure that the 

approved cost increase for the WSB is based on a schedule that the 

contractor has revised to meet all best practices for a high-quality, reliable 

schedule estimate. In its comment letter, NNSA stated that it has revised 

the schedule since we reviewed it and that it now reflects all activities 

needed to complete construction. We did not review the update to the 

WSB contractor’s schedule to confirm that it captured all activities to 

complete construction, which is one of the best practices associated with 

the characteristics of a high-quality schedule. Moreover, as detailed in 

appendix IV, the schedule we reviewed only partially or minimally met 7 of 

the other 9 best practices. To fully implement our recommendation, NNSA 

would need to ensure that the contractor has revised its schedule to meet 

all best practices for a high-quality, reliable schedule estimate. In its 

comment letter, NNSA stated that during the next project review, which is 

expected to occur by December 31, 2014, NNSA will review the schedule 

against best practices.

NNSA partially concurred with our fifth recommendation that DOE require 

a root cause analysis of all projects that experience cost increases or 

schedule delays exceeding a certain threshold established by the 

department. In its comment letter, NNSA stated that DOE program offices 

currently perform tailored root cause analyses as part of the baseline 

change proposal process outlined in the department’s project 

management order for increasing a project’s cost and schedule 

estimates. NNSA stated that, as a result, the department does not believe 

that an update to the project management order is required. NNSA further 

stated that the department will review the lessons learned from NNSA's 

root cause analyses for the MOX and WSB projects to see what best 

practices may be of benefit to other projects. However, as we stated in 

the report, DOE’s project management order does not include a 

requirement for a root cause analysis of projects experiencing significant 

cost increases or schedule delays, and NNSA officials said that they 
Page 36 GAO-14-231 Plutonium Disposition Program

decide on a case-by-case basis whether to conduct a root cause analysis. 

Moreover, the order does not define what a root cause analysis is, how or 

when a root cause analysis should be conducted, or what is meant by a 

tailored analysis. In addition, NNSA’s written comments did not provide 

information on the conditions that would trigger a root cause analysis. 

Leaving root cause analyses to an informal and undefined process within 

DOE program offices could result in such analyses not being conducted, 

not being conducted consistently, or not accurately identifying underlying 

causes of cost increases in order to identify and implement corrective 

measures and apply lessons learned to other DOE projects. We continue 

to believe that a root cause analysis should be conducted for all projects 

that experience cost increases or schedule delays above a threshold 

established by the department. We note that our recommendation is 

consistent with a requirement in the Weapon Systems Acquisition Reform 

Act of 2009; under the act, the Department of Defense must perform a 

root cause analysis of a cost increase that exceeds a certain threshold.

NNSA partially concurred with our final recommendation that DOE require 

life-cycle cost estimates covering the full cost of programs that include 

both construction projects and other efforts and activities not related to 

construction. In its comment letter, NNSA stated that the department’s 

project management order requires a comprehensive life-cycle cost 

analysis as part of the alternative selection process and that no further 

update to the order is required to address this recommendation. The 

intent of our recommendation goes beyond that of preparing a life-cycle 

cost estimate at the stage of selecting an alternative for a new capital 

asset project. Instead, the recommendation applies to departmental 

programs that include capital asset projects to meet the overall program 

need. As we stated in the report, NNSA did not follow all key steps for 

developing high-quality cost estimates in developing its draft April 2013 

life-cycle cost estimate for the Plutonium Disposition program, which 

currently includes the MOX facility and WSB capital asset projects, in part 

because it did not have a requirement to develop it. NNSA’s response to 

our recommendation suggests that the life-cycle cost estimates for the 

MOX and WSB projects that were required to be prepared years ago, 

when the projects were selected from among other alternatives, are the 

only life-cycle cost estimates needed to manage the Plutonium 

Disposition program. Furthermore, NNSA’s response contradicts the fact 

that it concurred with our recommendation to revise and update the lifecycle cost estimate for the overall Plutonium Disposition program in 

accordance with cost estimating best practices. We continue to believe 

that our recommendation that the department require life-cycle cost 
Page 37 GAO-14-231 Plutonium Disposition Program

estimates covering the full cost of programs that include construction 

projects should be implemented.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 7 days from the 

report date. At that time, we will send copies to the appropriate 

congressional committees, the Secretary of Energy, the NNSA 

Administrator, and other interested parties. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made key contributions to 

this report are listed in appendix VI.

David C. Trimble

Director, Natural Resources and Environment
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-14-231 Plutonium Disposition Program

To assess drivers of the construction cost increases for the Mixed Oxide 

(MOX) Fuel Fabrication Facility and Waste Solidification Building (WSB) 

that the National Nuclear Security Administration (NNSA) identified, we 

reviewed the Department of Energy’s (DOE) budget request for NNSA for 

fiscal year 2014, which provided a summary of the cost drivers for both 

projects. To assess cost drivers in further detail, we reviewed the MOX 

contractor’s September 2012 proposal for increasing the project’s cost, 

which discussed drivers from the contractor’s perspective. We also 

reviewed DOE’s December 2012 document approving an increase in the 

estimated cost of the WSB and a delay in the start of operations, which 

summarized cost drivers and their impact on the project’s cost and 

schedule. We visited the Savannah River Site to observe construction 

progress for both projects and interviewed NNSA and contractor officials 

responsible for managing the projects. We also interviewed officials from 

the NNSA Office of Fissile Materials Disposition, the NNSA Office of 

Acquisition and Project Management, and the DOE Office of Acquisition 

and Project Management. Separately, to understand how, if at all, cost 

drivers for the MOX facility were related to Nuclear Regulatory

Commission (NRC) regulation and licensing of the construction and 

operation of the facility, we reviewed NRC construction inspection reports 

and related documents, and we interviewed NRC officials responsible for 

overseeing the facility’s construction. In order to understand the 

components of cost growth for the MOX facility, which represented most 

of the Plutonium Disposition program’s construction cost increase, we 

also analyzed the MOX contractor’s earned value management (EVM) 

system that the contractor used to track and report on cost and schedule 

performance, including data from the EVM system on cumulative cost and 

schedule variance trends from July 2011 through April 2012 and the 

contractor’s variance report for April 2012.

To determine the extent to which NNSA analyzed underlying causes of 

the cost increases, we reviewed documents providing context for cost 

drivers. The documents we reviewed included NNSA Office of Acquisition 

and Project Management project review reports and monthly status 

reports; DOE Office of Acquisition and Project Management monthly 

status reports; DOE documents related to approval of the previous cost 

and schedule estimates for the MOX facility and WSB in April 2007 and 

December 2008, respectively; and documents related to specific cost 

drivers identified by NNSA, such as the MOX contractor’s October 2006 

report on construction markets and DOE reports related to its suspension 

of the WSB contractor’s system for tracking and reporting cost and 

schedule performance in November 2012. We also interviewed NNSA 

officials to determine the extent to which they had conducted or planned 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-14-231 Plutonium Disposition Program

any analyses to identify underlying causes of cost increases for the 

Plutonium Disposition program’s construction projects.

To determine steps NNSA took to hold contractors accountable for their 

role in the cost increases for the Plutonium Disposition program’s 

construction projects, we reviewed the contracts for the MOX facility and 

WSB, fees specified under the contracts, and NNSA’s fee evaluations 

and other documentation supporting its fee determinations. We also 

interviewed NNSA contracting officers who were responsible for 

administering the MOX and WSB contracts regarding the terms of the 

contracts, fees specified under the contracts, and actions NNSA took or 

planned to take to hold contractors accountable for their role in the cost 

increases. We obtained NNSA data on fees it paid to and withheld from 

the contractors, and we assessed the reliability of the data by checking 

for obvious errors in accuracy and completeness; comparing the data with 

other sources of information, such as NNSA’s fee determinations; and 

interviewing NNSA contracting officers who had knowledge of the data. 

We determined that NNSA’s data on fees were sufficiently reliable for 

reporting on the fees paid to and withheld from the contractors.

To assess the extent to which NNSA’s most recent estimates of the 

Plutonium Disposition program’s life-cycle cost and of the cost and 

schedule for completing the program’s construction projects met best 

practices we have compiled in guides identifying the characteristics of 

high-quality, reliable cost and schedule estimates,1

• NNSA’s life-cycle cost estimate for the Plutonium Disposition 

program. Because NNSA had not finalized a life-cycle cost estimate, 

we assessed NNSA’s most recent available estimate—spreadsheets 

dated April 2013 representing NNSA’s draft life-cycle cost estimate. In 

particular, we assessed the process NNSA used to develop the 

estimate against the 12 key steps described in the GAO Cost 

Estimating and Assessment Guide that should result in a high-quality, 

reliable cost estimate. To provide information on NNSA’s process, 

NNSA officials responsible for developing the estimate filled out a 

data collection instrument we developed. The data collection 

we tailored our 

methodology to the differing stages of NNSA’s development and approval 

of each estimate:

 1

GAO-09-3SP and GAO-12-120G.
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-14-231 Plutonium Disposition Program

instrument summarized each of the 12 key steps and provided space 

for NNSA officials to describe actions they had taken to meet the 

criteria for each step. To review the information provided by NNSA, 

we checked NNSA’s April 2013 estimate for obvious errors in 

accuracy and completeness and compared it with previous versions of 

the life-cycle cost estimate provided by NNSA. In addition, we 

interviewed NNSA officials to determine what requirements, if any, 

they followed for developing the estimate, their purpose for developing 

it, and their plans for presenting it for management approval. Finally, 

we interviewed NNSA officials from the Office of Analysis and 

Evaluation, which the Plutonium Disposition program had tasked with 

conducting an independent assessment of the MOX facility’s 

operating costs.

• NNSA’s estimate to complete the MOX facility. Because NNSA had 

not approved a revised cost and schedule estimate for the MOX 

facility, we assessed the MOX contractor’s September 2012 proposal 

for increasing the project’s cost, which NNSA had directed the MOX 

contractor to use as a provisional baseline for purposes of monthly 

reporting. We compared data presented in various tables of the 

proposal for consistency and reviewed additional documents, 

including the technical baseline providing a detailed description of the 

MOX facility. We provided a draft of our assessment to NNSA and 

revised the draft, as appropriate, after discussing our assessment with 

NNSA program officials and the contractor.

• NNSA’s estimate to complete the WSB. We assessed the WSB 

schedule estimate that the cost increase for the project approved in 

December 2012 was based on because, as described in the GAO 

Schedule Assessment Guide, a reliable schedule can contribute to an 

understanding of the cost impact if a project does not finish on time. 

Specifically, we compared the contractor’s February 2013 monthly 

update to its schedule estimate, which was the most recent available 

update when we conducted our analysis, with the 10 best practices 

associated with the characteristics of a high-quality schedule. As part 

of our assessment, we reviewed documents related to the project’s 

schedule, including NNSA’s project execution plan for the WSB, the 

project’s work breakdown structure, and the project’s February 2013 

update to the document showing the longest path to project 

completion. In addition, we interviewed the NNSA federal project 

director for the WSB and the WSB contractor’s project leader and 

scheduler. We provided a draft of our assessment to NNSA and 

revised the draft, as appropriate, after discussing our assessment with 

NNSA program officials and the contractor.
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-14-231 Plutonium Disposition Program

We conducted this performance audit from November 2012 to February 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: Assessment of NNSA’s Process 

for Developing a Life-cycle Cost Estimate for 

the Plutonium Disposition Program

Page 42 GAO-14-231 Plutonium Disposition Program

Best practice characteristic 

and overall assessment

Key steps to develop a highquality cost estimate Detailed assessmenta

Comprehensive:

Partially met

Develop the estimating plan Partially met. NNSA assigned a team to develop and update the 

estimate but did not have a written plan for developing it.

Determine the estimating 

structure

Partially met. Work breakdown structures to define in detail the 

work necessary to accomplish objectives were developed for the 

MOX and WSB projects and other components of the program, 

but NNSA had not formalized a program-level work breakdown 

structure.

Well-documented:

Partially met

Define the estimate’s purpose Substantially met. NNSA officials described the purpose as 

supporting annual budget requests, which include requirements 

that NNSA (1) present the full life-cycle cost of capital projects, 

such as the MOX facility, and (2) estimate expenditures for the 

fiscal year with respect to which the budget is submitted and at 

least the four succeeding fiscal years.

Define the program’s 

characteristics

Substantially met. NNSA developed a program requirements 

document to identify the scope, functions, and requirements of the 

Plutonium Disposition program. NNSA documented performance 

characteristics for program components in contracts, technical 

baselines, and execution plans.

Identify ground rules and 

assumptions

Partially met. NNSA identified ground rules and assumptions, but 

NNSA officials said that assumptions for the program change 

frequently, hindering development of a life-cycle cost estimate.

Obtain the data Substantially met. NNSA collected data at the project level, where, 

according to NNSA, data were documented in contractor systems 

and estimates were developed by teams of knowledgeable staff 

using historical information, current cost and pricing information, 

engineering and vendor quotes, cost guides, and current material 

and labor costs.

Document the estimate Minimally met. NNSA documented the estimate on spreadsheets, 

but it did not develop a single document to describe data sources 

and steps taken in developing the estimate so that it could be 

replicated by someone other than those who prepared it.

Present the estimate to 

management for approval

Not met. NNSA considered the estimate to be draft and 

predecisional, and NNSA officials said they did not have plans to 

present an estimate to management for approval until NNSA 

completes its reevaluation of its strategy for disposing of surplus 

weapons-grade plutonium.

Accurate:

Partially met

Develop the point estimateb Partially met. NNSA developed a point estimate, but it did not use 

a program-level work breakdown structure to do so because it had 

not formalized such a structure.

Update the estimate to reflect 

actual costs and changes

Partially met. NNSA updated the estimate periodically to include 

actual costs and changes to program and project requirements, 

but it did not clearly document how changes affected the estimate.

Appendix II: Assessment of NNSA’s Process 

for Developing a Life-cycle Cost Estimate for 

the Plutonium Disposition Program
Appendix II: Assessment of NNSA’s Process 

for Developing a Life-cycle Cost Estimate for 

the Plutonium Disposition Program

Page 43 GAO-14-231 Plutonium Disposition Program

Best practice characteristic 

and overall assessment

Key steps to develop a highquality cost estimate Detailed assessmenta

Credible:

Not met

Compare the point estimate to an 

independent cost estimateb Not met. NNSA did not conduct an independent cost estimate for 

the overall program’s life-cycle cost estimate, and it had not 

completed independent cost estimates for the program’s two 

construction projects.

Conduct a sensitivity analysis Not met. NNSA did not conduct a formal sensitivity analysis at the 

program level.

Conduct a risk and uncertainty 

analysis

Not met. NNSA did not conduct a risk and uncertainty analysis at 

the program level.

Source: GAO analysis of information from NNSA.

a

The ratings we used in this analysis are as follows: “Not met” means NNSA provided no evidence 

that satisfies the key step. “Minimally met” means NNSA provided evidence that satisfies a small 

portion of the key step. “Partially met” means NNSA provided evidence that satisfies about half of the 

key step. “Substantially met” means NNSA provided evidence that satisfies a large portion of the key

step. “Fully met” means NNSA provided complete evidence that satisfies the entire key step.

b

As described in the GAO Cost Estimating and Assessment Guide, developing the point estimate and 

comparing it with an independent cost estimate are separate parts of a single step. For purposes of 

assessing the extent to which a cost estimate achieves the characteristics of a high-quality cost 

estimate, developing the point estimate contributes to accuracy, and comparing the point estimate 

with an independent cost estimate contributes to credibility.
Appendix III: Assessment of the MOX 

Contractor’s Proposed Cost Estimate 

Compared with Industry Best Practices

Page 44 GAO-14-231 Plutonium Disposition Program

Best practice characteristic 

and overall assessment Best practice Detailed assessmenta

Comprehensive:

Substantially met

The cost estimate includes all life-cycle 

costs.

Met. The estimate covered construction and startup 

costs; at NNSA’s direction, the estimate excluded 

operation and maintenance costs.

The cost estimate completely defines the 

program, reflects the current schedule, 

and is technically reasonable.

Substantially met. The estimate was based on NNSA’s 

statement of work and the contractor’s technical 

baseline for the original scope of the MOX facility.

The cost estimate work breakdown 

structure is product-oriented, traceable to 

the statement of work/objective, and at an 

appropriate level of detail to ensure that 

cost elements are neither omitted nor 

double-counted.

Partially met. The work breakdown structure clearly 

outlined the end product and major work of the project, 

but some cost elements were missing from the work 

breakdown structure.

The estimate documents all costinfluencing ground rules and 

assumptions.

Partially met. The estimate documented that it was 

based on a profile of NNSA’s projected annual funding 

to complete the project but did not provide justifications 

for some assumptions, such as not more than a set 

amount of work being nonstandard.

Well-documented:

Partially met

The documentation captures the source 

data used, the reliability of the data, and 

how the data were normalized.

Partially met. The estimate was based on actual costs 

through May 2012 and used a database of labor and 

other costs, but it did not state whether or how all data 

had been normalized to ensure data comparability.

The documentation describes in sufficient 

detail the calculations performed and the 

estimating methodology used to derive 

each element’s cost.

Met. The estimate used a combination of expert 

opinion and extrapolation from actual data to develop 

estimates for and sum up individual cost elements of 

the work breakdown structure.

The documentation describes, step by 

step, how the estimate was developed so 

that a cost analyst unfamiliar with the 

program could understand what was 

done and replicate it.

Partially met. The estimate used quantities of materials 

and labor hours to develop estimates for individual 

cost elements but did not document how these 

quantities were estimated.

The documentation discusses the 

technical baseline description and the 

data in the baseline is consistent with the 

estimate.

Partially met. The estimate agreed with NNSA’s 

statement of work and the contractor’s technical 

baseline for the original scope of the MOX facility, but 

the technical baseline did not cover the addition of 

capability to supply plutonium feedstock.

The documentation provides evidence 

that the cost estimate was reviewed and 

accepted by management.

Partially met. DOE began a review of the proposed 

estimate but did not approve it.

Accurate:

Partially met

The cost estimate results are unbiased, 

not overly conservative or optimistic, and 

based on an assessment of most likely 

costs.

Minimally met. The estimate was higher than needed 

to achieve an 85 percent confidence level—the level 

directed by NNSA—that the final cost would be less 

than the estimate.

The estimate has been adjusted properly 

for inflation.

Substantially met. The estimate appeared to adjust 

cost elements for inflation, but adjustments were not 

well-documented.

Appendix III: Assessment of the MOX 

Contractor’s Proposed Cost Estimate 

Compared with Industry Best Practices
Appendix III: Assessment of the MOX 

Contractor’s Proposed Cost Estimate 

Compared with Industry Best Practices

Page 45 GAO-14-231 Plutonium Disposition Program

Best practice characteristic 

and overall assessment Best practice Detailed assessmenta

The estimate contains few, if any, minor 

mistakes.

Met. The estimate contained few minor mistakes, and 

calculations within the estimate were internally 

consistent.

The cost estimate is regularly updated to 

reflect significant changes in the program 

so that it always reflects current status.

Partially met. The estimate was based on actual costs 

through May 2012 and did not reflect updated costs 

from the contractor’s system for tracking and reporting 

cost and schedule performance.

Variances between planned and actual 

costs are documented, explained, and 

reviewed.

Minimally met. The estimate explained variances 

between planned and actual costs at a high level but 

not at the cost element level.

The estimate is based on a historical 

record of cost estimating and actual 

experiences from other comparable 

programs.

Partially met. The estimate did not explain to what 

extent it was based on historical data from other 

similar programs or facilities.

The estimating technique for each cost 

element was used appropriately.

Substantially met. The estimating method used—

developing the estimate at the lowest level of the work 

breakdown structure, one piece at a time, with the sum 

of the pieces becoming the estimate—was appropriate 

for a project under way.

Credible:

Minimally met

The cost estimate includes a sensitivity 

analysis that identifies a range of possible 

costs based on varying major 

assumptions, parameters, and data 

inputs.

Not met. The estimate did not include a sensitivity 

analysis.

A risk and uncertainty analysis was 

conducted that quantified the imperfectly 

understood risks and identified the effects 

of changing key cost driver assumptions 

and factors.

Partially met. The estimate included a risk and 

uncertainty analysis but did not properly conduct or 

clearly document all steps in the analysis.

Major cost elements were cross-checked 

to see whether results were similar.

Not met. The estimate provided no evidence that major 

cost elements were cross-checked.

An independent cost estimate was 

conducted by a group outside the 

acquiring organization to determine 

whether other estimating methods 

produce similar results.

Not met. DOE halted its independent cost estimate of 

the contractor’s proposed estimate as part of DOE’s 

decision to reevaluate its strategy for disposing of 

surplus weapons-grade plutonium.

Source: GAO analysis of the MOX contractor’s September 2012 proposal for increasing the cost of the MOX facility.

a

The ratings we used in this analysis are as follows: “Not met” means the proposal provided no 

evidence that satisfies the best practice. “Minimally met” means the proposal provided evidence that 

satisfies a small portion of the best practice. “Partially met” means the proposal provided evidence 

that satisfies about half of the best practice. “Substantially met” means the proposal provided 

evidence that satisfies a large portion of the best practice. “Fully met” means the proposal provided 

complete evidence that satisfies the entire best practice.
Appendix IV: Assessment of the Waste 

Solidification Building’s Schedule Estimate 

Compared with Industry Best Practices

Page 46 GAO-14-231 Plutonium Disposition Program

Best practice characteristic and 

overall assessment Best practice Detailed assessmenta

Comprehensive:

Partially met

Capturing all activities Minimally met. The schedule estimate’s 2,429 activities to 

complete the project included one summary activity in place of 

the construction subcontractor’s 3,851 activities and, therefore, 

did not capture the remaining detailed work to be performed by 

the subcontractor.

Assigning resources to all 

activities

Partially met. The schedule estimate assigned resources, such 

as labor and materials, to only about half of the remaining 2,429 

activities.

Establishing the durations of all 

activities

Substantially met. The schedule estimate included activity 

durations that were generally short enough to be consistent with 

the needs of effective planning.

Well-constructed:

Minimally met

Sequencing all activities Minimally met. The schedule estimate sequenced activities in 

ways that decreased the probability of activities starting on time 

and contained activities that were not properly tied with the start 

or end date of other activities, potentially obscuring the critical 

path determining the project’s earliest completion date.

Confirming that the critical path 

is valid

Partially met. Changes to the critical path were evaluated 

monthly and tracked in monthly status reports, but constraints in 

scheduled dates of certain activities convoluted the critical path.

Ensuring reasonable total float Minimally met. The schedule estimate included high total float 

values—the amount of time by which an activity can slip without 

affecting a completion date—potentially resulting in an 

inaccurate assessment of the project’s completion date.

Credible:

Partially met

Verifying that the schedule is 

traceable horizontally and 

vertically

Substantially met. The schedule estimate was traceable 

horizontally (i.e., across sequenced activities) and vertically 

(i.e., between activities and subactivities).

Conducting a schedule risk 

analysis

Minimally met. The contractor conducted a schedule risk 

analysis, but the results of the analysis were unreliable for 

determining the likelihood of the project’s completion date and 

did not align with DOE’s revised cost and schedule estimate.

Controlled:

Partially met

Updating the schedule with 

actual progress and logic

Partially met. According to project officials, the schedule was 

updated weekly, but no narrative accompanied the weekly 

updates. 

Maintaining a baseline schedule Minimally met. Project officials stated that they used the 

schedule to measure performance, but they did not provide 

thorough documentation enabling the schedule to be validated, 

such as a narrative providing a log of changes and their effects.

Source: GAO analysis of the WSB contractor’s schedule estimate, as updated in February 2013.

a

The ratings we used in this analysis are as follows: “Not met” means the schedule estimate provided 

no evidence that satisfies the best practice. “Minimally met” means the schedule estimate provided 

evidence that satisfies a small portion of the best practice. “Partially met” means the schedule 

estimate provided evidence that satisfies about half of the best practice. “Substantially met” means 

the schedule estimate provided evidence that satisfies a large portion of the best practice. “Fully met”

means the schedule estimate provided complete evidence that satisfies the entire best practice.

Appendix IV: Assessment of the Waste 

Solidification Building’s Schedule Estimate 

Compared with Industry Best Practices
Appendix V: Comments from the National 

Nuclear Security Administration

Page 47 GAO-14-231 Plutonium Disposition Program

Appendix V: Comments from the National 

Nuclear Security Administration
Appendix V: Comments from the National 

Nuclear Security Administration

Page 48 GAO-14-231 Plutonium Disposition Program
Appendix V: Comments from the National 

Nuclear Security Administration

Page 49 GAO-14-231 Plutonium Disposition Program
Appendix V: Comments from the National 

Nuclear Security Administration

Page 50 GAO-14-231 Plutonium Disposition Program
Appendix VI: GAO Contact and Staff 

Acknowledgments

Page 51 GAO-14-231 Plutonium Disposition Program

David C. Trimble, (202) 512-3841 or trimbled@gao.gov

In addition to the individual named above, Daniel Feehan, Assistant 

Director; Remmie Arnold; Antoinette Capaccio; Juaná S. Collymore; 

Joseph Cook; Tisha Derricotte; Emile Ettedgui; Cristian Ion; Alison 

O’Neill; Cheryl Peterson; and Karen Richey made key contributions to this 

report.

Appendix VI: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(361460)
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